Heidelberger Druckmaschinen (HDD) Investor Update summary

Strategic growth initiatives and direction

• Targeting at least €300 million in additional annual sales within four years, focusing on packaging, digital workflows, and commercial inkjet printing, supported by a partnership with Canon and leveraging global megatrends and premium packaging demand.

• Expanding international business, especially in China and Asia, with over 85% of business outside Germany and diversified revenue streams across EMEA, APAC, Americas, and Germany.

• Leveraging a large installed base and AI-driven service models to enhance recurring revenue, with lifecycle business generating €900 million in net sales and plans to digitize service operations.

• Exploring new business fields such as high-performance charging equipment, green hydrogen, and launching HEIDELBERG Industries for technology segment expansion.

• Investments secured for a modern data center, infrastructure modernization, training, and projects in software and AI at Wiesloch-Walldorf.

Cost optimization and operational efficiency

• Personnel cost reduction plan targets over €100 million in cumulative savings, mainly at Wiesloch, through reducing up to 450 FTEs over three years and offsetting wage increases.

• Wage increases will not be passed on for two years, and demographic levers, retirements, and targeted reductions in administration and management are used to achieve savings.

• Cash outflows for the program are estimated at €40 million over two years, with special items of around €30 million recognized in FY 2024/2025, excluded from adjusted EBITDA.

• Agreement guarantees a minimum workforce of 3,500 at Wiesloch-Walldorf until the end of 2028, with continued investment in the site and strong training quotas.

• Production network and cost-saving measures are under continuous evaluation, with further agreements expected by fiscal year-end and the plan serving as a pilot for other German sites.

Financial outlook and guidance

• Maintains a robust balance sheet with positive net financial position and ongoing positive free cash flow generation.

• Guidance for FY 2024/25 is confirmed, with sales forecasted at the previous year's level (€2,395 million) and adjusted EBITDA margin expected at 7.2%.

• Plans to provide more detailed updates on strategy and progress at upcoming Capital Market Days.

• Ongoing margin headwinds acknowledged, but growth initiatives and cost controls are expected to drive performance.

• Management notes that actual results may differ from current assumptions due to economic, currency, and industry changes.