Heidelberg: reduce to the max! Or less is more?
By Andreas Weber
Heideldruck started massive changes. Restructuring will cost around € 300 m. 2k employees have to leave. See as well my analysis of qualified feedback from experts around the globe.
My Take
Creativity and confidence are required.
Biggest challenges:
1. Significantly improve internal value creation as quickly as possible.
2. To cushion impending sales losses as much as possible.
The key facts
- Closure of unprofitable businesses as well as sharp cuts in production costs and structural costs
- Production of “Primefire” and “very-large-format printing” will be stopped – Action package includes global reduction in force by up to 2,000 jobs
- Non-recurring expenses of approximately €300 million impact FY 2019/20 earnings
- Return transfer of around €375 million in liquidity from trust fund secures financing of action package and significantly increases financial stability
- Net debt to be almost completely eliminated; high-yield bond to be repurchased
- Focus on technology leadership in core business with emphasis on digitalization to advance(Source: Heidelberg Press Release March 17th, 2020)
First analysis of the webcast by the Heidelberg Board of Management March 18th, 2020, 10:00 AM CET
I would like to share my short real-time report based on the ad hoc news Heidelberg communicated yesterday evening.
1. By completely reducing net debt (pension fund reserves are added to the majority of the balance sheet), Heidelberger Druckmaschinen AG can make it an attractive takeover candidate.
2. Setting the #Primefire106 as the #inkjet printing flagship eliminates operational losses, but slows down growth through innovation in the prospering #packaging market. — CFO Marcus Antonius Wassenberg’s assessment that digital printing is just beginning is sounding worth considering. After all, Heidelberg has developed over many years and invested over € 150m in R&D. And all competitors rely on #Inkjetprinting. Maybe new partnerships can arise. In addition, Heidelberg is holding intensive discussions for new strategic partnerships.
3. It is still unclear how / whether the measures set out by CEO Rainer Hundsdörfer will affect order intake in times of the #coronavirus chaos. At the moment you can react (short-time work, reduce costs etc.) and see what happens. Manufacturing in China is picking up speed again.
4. The failure of the #drupa2020 has good and bad effects. It saves effort and costs, but brings communication with customers to a standstill.
5. #subscription and connected #digitalservices are becoming increasingly important.
More information by Heidelberg IR via Twitter
Find the recorded webcast and the presentation of today's call on our Investor Relations website: https://t.co/uIyLSQaV11 pic.twitter.com/D6xQvHao0x
— Heidelberg IR (@Heidelberg_IR) March 18, 2020