Heidelberger Druckmaschinen AG: Preliminary Figures for Financial Year 2007/2008

Market conditions worsened considerably for Heidelberger Druckmaschinen

AG (Heidelberg) (FWB: HDD) in financial year 2007/2008 (April 1, 2007 to

March 31, 2008), with sales, operating result and net profit all down on

the previous year´s levels. "Poorer

economic prospects have taken their toll over the past financial year

in particular during the second six months," stated Heidelberg CEO Bernhard Schreier. "This

has led to a reluctance to invest in a number of regions," he added.
There is no market improvement on the horizon for the current financial

year 2008/2009. With drupa "“ the hugely

important trade show running from May 29 to June 11, 2008 "“ still to come, it is difficult to predict how sales for financial year

2008/2009 will develop. Consequently, Heidelberg will be publishing its

sales forecast for the current financial year at the beginning of August

with its figures for the first quarter.
However, it is already predictable that the sales for the first quarter

of financial year 2008/2009 will be down on the previous year´s

figure, and that the operating result (EBIT) will be negative. Like the

first quarter 2008/2009, the entire fiscal year will be affected by

non-recurring expenditures for drupa, the start-up of series production

for a number of new products and the strong euro. For these reasons, the

operating result for the entire fiscal year 2008/2009 will be down on

previous fiscal year´s figure.
"After drupa but before the Annual General

Meeting on July 18, we will announce appropriate measures to secure our

leading market position and financial performance in the long term," stated Schreier. "Our aim is to improve our

cost structures and lessen the effect of exchange rates in the medium

term by internationalizing purchasing and production. We will also be

stepping up our service and consumables operations to further reduce our

dependency on economic cycles," he added.
Preliminary figures for financial year 2007/2008
Preliminary sales by the Heidelberg Group for the year as a whole

totaled EUR 3.670 billion, 3.5 percent down on the previous year´s

figure (previous year: EUR 3.803 billion). Business slowed in the fourth

quarter in particular due to the effects on the world economy of the

financial crisis in the U.S. and customers´ reluctance to make investments in the run-up to the all-important drupa

trade show.
Preliminary incoming orders in the financial year just closed

amounted to EUR 3.649 billion, around 5 percent down on the previous year´s

figure (previous year: EUR 3.853 billion). Whereas the high volume of

orders achieved in the previous year was exceeded in Germany, fears of a

recession and further effects of the credit crunch made U.S. customers

less ready to invest. Business was also less than satisfactory in the

United Kingdom and Japan. On a more positive note, orders were boosted

by the recovery in the Chinese market.
The preliminary order backlog at March 31, 2008 was EUR 874

million (previous year: EUR 1.018 billion).
In the period under review, the Heidelberg Group recorded an operating

result of EUR 268 million (previous year, adjusted for positive

one-time effects: EUR 302 million). This represents an operating return

on sales of 7.3 percent (adjusted value for the previous year: 7.9

percent). The previous year´s figure was

boosted by the sale of Linotype GmbH and the R&D Center in Heidelberg ("sale

and lease back").
The preliminary net profit amounted to EUR 142 million (previous

year, adjusted for positive one-time effects: EUR 144 million). At EUR

215 million, the free cash flow remains at a high level (previous

year: EUR 229 million). Based on sales, Heidelberg was able to reduce

the working capital by 1.1 percentage points to 32.5 percent.
"We have once again achieved a good free cash

flow in a difficult economic situation. Based on the preliminary figures

of financial year 2007/2008 the Management Board intends to propose the

Supervisory Board and subsequently the Annual General Meeting a dividend

of EUR 0.95, which matches last year´s

dividend," said Heidelberg CFO Dirk Kaliebe.
Performance in the divisions and regions
In the Press Division (offset printing), preliminary sales were

slightly down on the previous year at EUR 3.213 billion (previous year:

EUR 3.321 billion). Preliminary incoming orders fell by 5 percent to EUR

3.2 billion (previous year: EUR 3.367 billion). At EUR 239 million, the

preliminary operating result for this division was below the previous

year´s adjusted figure of EUR 254 million.
The Postpress Division (finishing) failed to meet the targets

set. Exchange rate movements and the reluctance of U.S. printshops to

invest were the main reasons for the division´s

preliminary sales, incoming orders and operating result falling below

the previous year´s level. Preliminary sales

amounted to EUR 427 million (previous year: EUR 445 million)

preliminary incoming orders were EUR 419 million (previous year: EUR 449

million), and the preliminary operating result EUR -7 million (previous

year: EUR 7 million).
In the EMEA, North America, Latin America, and Asia/Pacific regions

sales and incoming orders either matched the previous year´s

level or fell below it. Sales and incoming orders only climbed

significantly in the Eastern Europe region. Growth was particularly

strong in Russia in the year under review. It was a different story for

the Asia/Pacific region where, despite the recovery in the Chinese

market, the figures fell below the previous year due to the extremely

unfavorable currency situation for European suppliers in Japan. Incoming

orders slackened off in the North America region, in particular in the

second half of the year.
At March 31, 2008, the Heidelberg Group had a workforce of 19,596

worldwide (previous year: 19,171). Most of the new appointments were in

the field of production and global sales.
Other dates:
The scheduled publication date for the Annual Report 2007/2008 is June

10, 2008. As this coincides with the drupa trade show, a press release

will replace the usual press conference.
For the table with the figures and further details, visit the Internet

Press Lounge at www.heidelberg.com.
Important note:
This Press Information contains statements about future development that

are based on assumptions and estimates by the management of Heidelberger

Druckmaschinen Aktiengesellschaft. Even if the management is of the

opinion that these assumptions and estimates are accurate, future actual

developments and future actual results may differ significantly from

these assumptions and estimates due to a variety of factors. These

factors can include changes to the overall economic climate, changes to

exchange rates and interest rates and changes in the graphic arts

industry. Heidelberger Druckmaschinen Aktiengesellschaft provides no

guarantee that future developments and the results actually achieved in

the future will agree with the assumptions and estimates set out in this

press release and assumes no liability for such.