Heidelberg increases sales and records net profit after taxes

Heidelberger Druckmaschinen AG (Heidelberg) has ended the latest quarter with a positive net result after taxes, and its net result before taxes after nine months (April 1 to December 31, 2015) reached the break-even point. This means the company is on track to once again record a positive net result after taxes for financial year 2015/2016 as a whole and secure a long-term return to profitability. Developments during the current financial year prove the success of the realignment implemented by Heidelberg. The main focal points for the future will be further developing the growing digital business and continuing to expand service business. The Heidelberg Services segment already accounted for almost half of Group sales after nine months.

“We’ve made good progress with our goal of ensuring long-term profitability at Heidelberg. Our new portfolio is more closely geared toward stable market segments, is more profitable, and creates the conditions for further growth,” said Heidelberg CEO Gerold Linzbach.

Net profit after taxes in third quarter The nine-month business results achieved by Heidelberg are pointing in the right direction overall. Sales and the operating result for the reporting period were a significant improvement on the previous year’s figures. Group sales were 16 percent up on the equivalent nine months of the previous year at € 1.802 billion (previous year: € 1.552 billion). This figure includes positive exchange rate effects amounting to € 93 million. The successful integration of the newly acquired PSG Group also made a substantial contribution to the higher sales. At a regional level, sales were well up in North America and Europe, while Eastern Europe and Latin America re-mained stable. Sales after nine months are also encouraging in the Asia/Pacific region. In the third quarter, however, the very subdued market development in China was reflected by a fall in orders. Total incoming orders in the reporting period were significantly higher than in the previous year at € 1.904 billion (previous year: € 1.780 billion).

The operating result in the third quarter and after 9 months continued its upward trend. EBITDA excluding special items as at December 31, 2015 increased to € 119 million (previous year: € 80 million), while EBIT excluding special items doubled to € 65 million (previous year: € 29 million). The Heidelberg Services segment is still on target to achieve the planned EBITDA margin of 9 to 11 percent. Improvements resulting from the portfolio measures were the reason for the better result. Regional weaknesses, especially in China, mean the Heidelberg Equipment segment has not yet been able to reach the expected EBITDA target margin of 4 to 6 percent.

Refinancing measures in previous quarters led to a financial result as at December 31, 2015 of € –42 million (previous year: € –49 million). The pre-tax result after nine months reached the break-even point (€ 0 million; previous year: € –92 million). The net result after taxes for the third quarter improved by € 60 million to € 7 million (previous year: € –53 million) and the nine-month figure of € –7 million was far better than the € –95 million recorded for the equivalent period of the previous year.

The free cash flow after nine months was € –37 million (previous year: € –16 million). The negative result was primarily due to restructuring costs and the PSG acquisition. The net debt for the quarter under review remained low at € 282 million (March 31, 2015: € 256 million). The resultant leverage (ratio of net financial debt to EBITDA excluding special items for the last four quarters) of 1.2 thus remained significantly below the target value of 2.

“We have created the financial scope to finance acquisitions and invest in growth and innovation. In the future, we will keep working on further optimizing our financing framework and ensuring the continued strategic development of Heidelberg,” said CFO Dirk Kaliebe.

Heidelberg a driving force behind industry’s digitization at drupa At the drupa trade show in May this year, Heidelberg will be presenting smart services and networked products required for further industry digitization. The digitized print shop of the future will feature automated, cost-optimized production processes and equipment that works almost entirely indepen-dently and autonomously. Over 10,000 presses have already been installed and networked worldwide, creating the basis for innovative data-based services. Heidelberg will also be joining forces with its cooperation partner Fujifilm to unveil a new, highly productive inkjet-based digital printing system for industrial applications. It is the only supplier to offer customers the opportunity to run offset and digital technologies in parallel based on a user-friendly, integrated process.

Net result after taxes in third quarter improves by € 60 • million to € 7 million (previous year: € –53 million) Sales after nine months up 16 percent at around • € 1.8 billion (previous year: € 1.55 billion)Operating result after nine months improves to € 119 • million – net result before taxes reaches break-even point Heidelberg a driving force behind industry’s digitization • at drupa Outlook for year as a whole unchanged•

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NewsBRIEFHeidelberg Graphic Systems Southern Africa (Pty) LtdJohannesburg Tel 011 574 4000 • Cape Town Tel 021 534 0460 • Durban Tel 031 705 3366www.heidelberg.com/za/enFebruary 2016tember 2015

Outlook for year as a whole unchanged Boosted by healthy order books, Heidelberg is aiming for sales growth of 2 to 4 percent after adjustment for exchange rate movements in the current financial year 2015/2016. As in the previous year, the company is assuming that sales will be higher in the second half of the financial year than in the first.

Assuming that the initiatives to increase margins in the Equip-ment area in particular and to optimize the portfolio take effect towards the end of the financial year, the company still expects to be able to achieve an operating margin based on EBITDA of at least 8 percent of sales, adjusted for exchange rate effects, in financial year 2015/2016. The Heidelberg Equipment seg-ment is expected to contribute within a range of between 4 and 6 percent to this result and the Heidelberg Services segment 9 to 11 percent. In the Heidelberg Financial Services segment, customer financing is still primarily outsourced. This segment, too, should continue to make a positive contribution to EBITDA in the future.

Other dates: The Annual Accounts Press Conference, Annual Analysts’ and Investors’ Conference for 2015/2016 is scheduled for June 8, 2016 at the drupa trade show in Dusseldorf.

For additional details about the company and image material, please visit the Press Lounge of Heidelberger Druckmaschinen AG at www.heidelberg.com.

The report on the third quarter of financial year 2015/2016 can be accessed at www.heidelberg.com.

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Further expansion of Heidelberg’s postpress range for drupa 2016

Postpress plays an important role in the value chain in print production. On the one hand because it’s where the final product is produced, and on the other hand because the ma-chines are intended to be integrated into an overall workflow and timed in such a way as to achieve optimum overall pro-ductivity. The top priority for commercial printers is maximum productivity, while for packaging printers it is quality coupled with reliable and fault-free production. Heidelberger Druckmaschinen AG (Heidelberg) has the right solutions for all these requirements. “We have consistently enhanced our postpress range in order to optimize the entire produc-tion process, and will be showcasing new machines for both commercial and packaging printers at drupa 2016 which will help our customers to be successful and competitive in their production”, explains Harald Weimer, Member of the Management Board responsible for the Heidelberg Sales and Services Segment and in charge of the Postpress Division.

Postpress Commercial: Up to 50 percent higher productivity thanks to the new generation of Stahlfolder TH/KH 82-P folding systemsHeidelberg will be presenting the new models of the Stahl-folder TH/KH 82-P folding machines at drupa 2016. The “P” stands for enhanced performance, productivity, and reliability. This series is aimed at industrialized commercial printers with peak performance machines from the Speed-master XL series or book binders with an annual production of over 40 million sheets. It rounds out the top end of the folding machine range, which now consists of the following product series classified by performance classes and customer requirements: Stahlfolder Ti, Stahlfolder BH/CH, Stahlfolder TH/KH, and the new Stahlfolder TH/KH 82-P as a complement to the Stahlfolder TX 96.

The PFX feeder has been carried over into the new models of the Stahlfolder TH/KH 82-P as a technology transfer from the peak performance machine Stahlfolder TX 96. This is a basic prerequisite for reliable separation and feeding of the sheets to the folding machine in a stream of shingled sheets. The increase in productivity of up to 50 percent is achieved through an innovative sheet guide, which permits shingled folding through the entire folding machine. This means that shingled processing of sheets is now also possible in the fold-ing stations in the Stahlfolder TH/KH 82-P.

This has two advantages for the user: Shingled guiding enables more sheets to be processed in the same time,

without increasing the speed at which sheets are transported. For example, folded sheets in the final format 16-page A4 can be produced at a rate of up to 16,000 sheets per hour, at a machine speed of just 150 meters a minute. Common machine speed results in an increase in quality as well as more stable and constant production, even with sensitive papers.

New user reports uniform folding and better production planning“We are so happy with the new Stahlfolder TH 82-P that we bought it along with a Stahlfolder KH 82-P after the field test,” report Klaus Harig and Rainer Suerbaum, both heads of the postpress department of the bookbindery of Meinders & Elster-mann GmbH & Co.KG (M&E). The full-service printing company in Belm, Osnabrück has been testing the Stahlfolder TH 82-P since last fall, and has found the perfect postpress complement to its existing Stahlfolder TX 96 folding systems for keeping pace with the high output of the Speedmaster XL 106 ma-chines. “The Stahlfolder TH/KH 82-P machines are unbeatable, especially when it comes to 16-page signatures in conventional imposition, because the predictable folder outputmeans we can better plan now. From May, all postpress machines will be integrated into the Prinect workflow to make production even more transparent and efficient.”

The signatures created in this way are then forwarded seamless-ly to the saddle stitchers and adhesive binders, where they are turned into end products like brochures, catalogs, magazines, and business reports. M&E Druckhaus has evolved over its long history to become the international system provider it is today with around 170 staff.

Stahlfolder TH/KH machines score with productivity, flexibility, and modularityHeidelberg presented the Stahlfolder TH/KH generation at drupa 2004 and has been consistently enhancing these machines ever since. The enhancements include the introduc-tion of the Stahlfolder KH 82 at drupa 2008 and the introduc-tion of the PFX feeder for the shingled system in 2012. There are thousands of Stahlfolder machines installed around the world. The users value the modulare design of the folding machines, and therefore their very high flexibility. The enhanced Stahl-folder TH/KH 82-P machines stand out thanks to their produc-tivity, which is guaranteed through the use of the palamides alpha 500 hd delivery with one-person operation (a horizontal log stacker can alternatively be used). A new enhancement to the Stahlfolder TH/KH folding machines is an optional press module integrated in the folder. This produces a sharper fold,

Postpress Commercial: Up to 50 percent higher productivity thanks to the new generation • of Stahlfolder TH/KH 82-P folding systemsNew user reports uniform folding and better production planning• Postpress Packaging: Further expansion of partnership with Masterwork • and new machines for drupa 2016

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The new generation Stahlfolder TH/KH 82-P folding machines for higher productivity. Productivity can be increased by up to 50 percent in a Stahlfolder TH 82-P with PFX feeder with shingled sheet alignment and palamides alpha 500 hd delivery.

Klaus Harig (left) and Rainer Suerbaum, both heads of the postpress department at Meinders & Elstermann GmbH & Co.KG, thoroughly tested the new Stahlfolder TH 82-P and are more than satisfied with its high pro-ductivity.

Product portfolio Heidelberg Commercial

Product portfolio Postpress Packaging

resulting in better quality and better processing in subsequent folding stations.

“The new Stahlfolder TH/KH 82-P allows us to increase productivity without compromising on quality and process reliability”, explains Harald Weimer. “The machines can also be integrated into the Prinect printing and media workflow and controlled via Remote Service for maximum transparen-cy and reliability. This in turn is a big step towards the smart print shop.” The Stahlfolder TH 82-P, Stahlfolder KH 82-P, and Stahlfolder CH 56 folding machines will be presented at drupa in Hall 1 in the Commercial area.

Postpress Packaging: Further expansion of partnership with Masterwork and new machines for drupa 2016The strategic partnership between Heidelberg and the Chinese company Masterwork Machinery Co. (MK) in the area of postpress for packaging printing is being further expanded. All Heidelberg distributors are now selling the die cutters and folder gluers produced by Masterwork, with Heidelberg looking after servicing. MK will have the big-gest partner stand at drupa in Hall 1. There, the visitors will see an extensive range with new machines. In the future the value class will feature die cutters from the Easymatrix series which offer an attractive price/performance ratio. The professional class will feature die cutters from the ProMatrix models which are intended for medium to long production runs. A new launch for drupa will be the introduction of a die cutter from the peak performance class which delivers maximum productivity and can be integrated into a smart print shop with the Prinect workflow or data terminals.

“With MK’s well-rounded range of die cutters, we can provide the right solution for packaging printers for effec-tive and economic production of folding boxes, no matter the application”, explains Harald Weimer. “The partnership with MK has gotten off to a successful start, and we will be showcasing new products at drupa for folder gluers also.”

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“Smart Print Shop”: Heidelberg introduces greater machine intelligence with the new Speedmaster generation

In print production, the intelligent use and linking of digital information enables even complex processes to be made leaner and more efficient, increasing profitability in the long term. Heidelberger Druckmaschinen AG (Heidelberg) recognized this potential early on, and has been consistently promoting digital integration ever since it introduced the Prinect print and media workflow in 2000. Digital integra-tion provides a framework for print shops to realize industrial processes with integrated interfaces to customers, suppliers, production and logistics.

The new Speedmaster generation to be presented at drupa 2016 can be integrated into this digitized process world more easily and quickly. The new Prinect Press Center XL 2 machine control station not only assumes the role of the digital interface in the workflow here, but also the intelligent human/machine interface which helps the operator to fully exploit the performance of the machine. “We were ahead of our time when we presented the Prinect Press Center with the wallscreen in 2008”, recalls Stephan Plenz, Member of the Management Board and responsible for the Equipment Seg-ment at Heidelberg. “Today, the big displays are almost taken for granted; users value the benefits in daily production and do not want to be without the wallscreen, a fact impressively demonstrated by the 100-percent repurchase rate.”

Heidelberg is now presenting the next stage of development with the new Wallscreen XL. With a diagonal screen measure-ment of 65 inches, a resolution of 4K and an even clearer structure, it is the perfect complement to the enhanced operating concept. The option of individual customization de-manded by many customers has been significantly extended with the introduction of the “myWallscreen” area. It permits the configuration of individually selected information panels, while new intelligent widgets provide practical added value. For example, the areas with higher color assignment on the sheet can be indicated based on the prepress data or the “Plate on Demand” function can be used which allows the printer to initiate the exposure of a new printing plate directly from the control station and in this way avoid or minimize downtimes.

Along with the new Wallscreen XL, the operating concept has been refined to make it even simpler. The user can now operate the new multi-touchscreen and the touchpad using swiping techniques familiar from smartphones or tablets. “The new Prinect Press Center is the common denominator in our Speedmaster drupa generation and is available in appro-priate configuration levels for all product lines”, explains Mr. Plenz. “We have also strategically enhanced the individual series and are offering a comprehensive package of innova-tions for drupa 2016. The focus here is always on customer benefits and the kinds of solutions the customer needs for its specific requirements.”

A number of key innovations will already have been intro-duced by drupa 2016, for example the second generation of the AutoPlate XL 2 simultaneous plate changer for the Speed-master XL 106. Apart from a further reduction in the time it takes to change plates, it is now also possible to change all

Integration into the digital world enhances transparency, permits process optimization, and increases overall performance• New generation of the Prinect Press Center with refined operating philosophy and optimum integration into intelligent • digitized production systems Multitude of product innovations across all format classes make the new Speedmaster generation even more attractive•

the printing plates while the rubber blankets and printing cylinders are being washed.

The only inline measuring system that offers true spectral measurement, the Prinect Inpress Control 2, is also available in its second generation and boasts much faster measure-ment. The time until the first measurement has been halved and a further 20 percent reduction in waste is possible.

Specifically for packaging printers, Prinect Inpress Control 2 makes it possible to measure and control print control strips printed on opaque white. “Measuring on opaque white is no easy feat”, explains Mr. Plenz. “However, we are going one step further with our offline measuring system Prinect Image Control 3. It doesn’t just measure on opaque white – we have succeeded in measuring and even controlling the opaque white itself. This enables us to offer our customers unprecedented process control and color constancy on transparent or metalized printing stocks.”

Focus on increased productivity and flexibility as well as shorter setup timesStill at the prototype stage when it was presented at drupa four years ago, the evolution of the Anicolor technology will be presented at drupa 2016. Anicolor 2 offers impressive new options such as the Anicolor Booster. This switches to a higher density range at the push of a button. This does away with the need to change ink series or even screen rollers, saving time and making Anicolor 2 even more flexible in use and easier to operate.

The range of DryStar LED high-performance drying systems has been further expanded and is now available for the XL series as well as the Speedmaster CX/SX 102. The optimum integration of the systems into the machine and the machine control system permits additional energy savings thanks to format-specific activation of the LEDs. Energy savings of to 50 percent are possible depending on the format. The high performance reserve of the DryStar LED ensures that produc-tion speed is maintained, despite the degradation of LEDs that usually occurs over time.

The Speedmaster XL 75 is getting a new feeder for drupa 2016, which has been carried over from the Speedmaster XL 106 as a technology transfer and includes key functions like sheet slowdown and automatic sheet arrival control. The gentle, precise and reliable sheet guide means that high production speeds can be achieved stably even with critical and difficult materials. Prior experience shows that higher productivity of up to 1,500 sheets per hour can be achieved with materials like lightweight papers or labels.

The transfer of technologies from the XL series to the Speed-master CX 102 is being continued. Fast washing times of un-der a minute are possible with XL washing technology hard-ware and software. The washing modules can be swapped from unit to unit. This means that a prepared additional module can be used when changing the washing blanket, reducing the machine downtime by 80 percent.

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The Speedmaster XL 75 with the new Anicolor 2 technology is now even more productive and flexible. The Anicolor Booster switches to a higher density range at the push of a button, doing away with the need to change ink series or even screen rollers.

The DryStar LED high-performance drying systems permit optimum integration of the systems into the machine and the machine control system. Energy savings of to 50 percent are possible depending on the format.

The transfer of technologies from the XL series is being continued in the Speedmaster CX 102. For example, it is now available with a fully automated delivery non-stop system.

The heart of the new Speedmaster genera-tion to be presented at drupa 2016 is the Prinect Press Center XL machine control station. It not only assumes the role of the digital interface in the workflow, but also the intelligent human/machine interface which helps the operator to fully exploit the performance of the machine.

The fully automated delivery non-stop system has also been carried over from the Speedmaster XL 106. The new blanket system ensures reliable non-stop operation and is not just limited to cardboard, but is also suitable for thinner materials.

With the new Air Transfer System and the optimized gripper systems, there is no need to adapt the gripper bar height to the printed stock thickness. The Speedmaster CX 102 as the univer-sal machine therefore covers the entire printed stock range and is now easier to operate.

“The new generation of the Prinect Press Center will upgrade our entire Speedmaster portfolio. We have therefore refined our Speedmaster fleet to be able to offer our customers the best range for their investment in the digitized future, namely an integrated, stable system consisting of machine, workflow, ap-plication technology, consumables, and services. Because the only way to make the most of the potential offered by digitized production is through the optimal and intelligent interaction of all these parameters”, summarizes Stephan Plenz.

Heidelberg will be presenting further innovations for even greater automation in the sheet offset area at drupa 2016.with materials like lightweight papers or labels.

Click here for the Heidelberg drupa quiz!

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