"The reluctance to invest among commercial printers in virtually all markets continued during the first quarter. The weak demand in the USA and Europe had a particularly strong impact on the Sheetfed division in this quarter", says Schreier.
"The current economic climate does not allow concrete sales and profit forecasts for the current fiscal year."
This was reflected in the company’s operating result, posted at a EUR59 million loss, compared to a EUR21million profit in 2002/2003. The net loss for the period was EUR77million, compared to a EUR12million profit in the corresponding period last year.
The slumping market has had an impact on employee numbers over the past year.
As of June 30, 2003, the Heidelberg Group employs around 24,100 worldwide, down from 24,700 last year. Since April 1, 2002, the Company has reduced its staffing levels worldwide by around 2300 on a comparable basis, including approximately 600 in the first quarter of 2003/2004. Overall, Heidelberg is looking to reduce its staffing levels worldwide by around 3200 over the period April 1 2002, to March 31 2004.
Sales in the Sheetfed Division fell from around EUR700 million to EUR500 million. Incoming orders dropped by almost 35 per cent to EUR551 million. Customers in the major Western markets, in particular, are deferring investments in large printing systems. This situation is being further exacerbated by increasingly tough competition from Japanese manufacturers that has emerged as a result of exchange rate influences. The Sheetfed Division recorded an operating loss of EUR18 million, compared to a EUR74 million profit in the previous year, due mostly to lower capacity utilisation.
In the Digital and Web Systems Divisions, sales remained stable and the operating result improved. According to Herbert Meyer, Heidelberg CFO, "Initial successes of the site concentration in the Digital Division and of staff cutbacks in Web Systems had a positive effect on results. Sluggish demand also affected the Postpress Division. This sector can only expect an improvement in results after the site consolidations have been concluded."
Restrained sales developments in all regions reflected the continuing weakness in global demand for investment goods. Only the Eastern Europe region came close to repeating the satisfactory figures of the previous year, with sales of around EUR70million. In the Asia/Pacific region, China remains a growth market. In this country, Heidelberg expanded its position during the first quarter of 2003/2004.