Heidelberger Druckmaschinen Aktiengesellschaft Q1 Earnings Call Highlights

First-quarter performance weakened: Sales fell 13% to €404 million and adjusted EBITDA dropped to €1 million, primarily because Italy’s expired subsidy program reduced orders by more than €60 million. Despite the pressure, the order backlog increased to €762 million, providing visibility for upcoming quarters. Balance-sheet and cash-flow pressures increased: Free cash flow was negative €77 million, the company posted a €32 million net loss, and its net financial position shifted to €39 million of net debt. Heidelberg expects cash outflows to ease but still anticipates negative free cash flow for the full fiscal year due to planned investments. Outlook and strategic expansion remain intact: Management reaffirmed its forecast for broadly stable full-year sales and a significant improvement in adjusted EBITDA margin, supported by cost reductions and expected volume normalization. Acquisitions of Manroland Sheetfed and POLAR, along with investments in technology, defense and energy, are intended to expand recurring revenue and higher-margin businesses. Heidelberger Druckmaschinen Aktiengesellschaft ETR: HDD reported lower first-quarter sales and sharply weaker adjusted EBITDA as the expiration of an Italian incentive program weighed on demand, particularly in its Print & Packaging Equipment business. Management nevertheless reaffirmed its full-year 2026/2027 outlook, citing expected sales normalization, ongoing cost actions and expansion in higher-margin and technology-focused businesses. Order intake for the quarter totaled €537 million, down 4% from €560 million a year earlier. Sales declined 13% to €404 million from €466 million. Adjusted EBITDA fell to €1 million from €20 million in the prior-year quarter, resulting in an adjusted EBITDA margin of 0.2%, compared with 4.4% a year earlier. CEO Jürgen Otto said the phaseout of Italy’s subsidy program accounted for more than €60 million fewer orders in the country versus the prior-year first quarter. While Italy and other EMEA markets pressured sales, China recorded a clear sales increase, and China, Japan and the U.S. increased order intake, according to the company. Head of Finance Volker Herdin said Heidelberg’s order backlog increased to €762 million at the end of June from €639 million at the beginning of the fiscal year, providing visibility for coming quarters. The company said the lower sales volume was concentrated in Print & Packaging Equipment, with EMEA sales affected by Italy, the Alps region and Turkey. Regional performance was mixed: EMEA order intake declined 16% to €241 million, while sales fell 23% to €195 million. Asia-Pacific order intake rose 17% to €177 million and sales increased 3% to €129 million, led by China. Americas order intake was broadly stable at €119 million, while sales declined 9% to €80 million. Higher sales in Brazil only partly offset lower sales in the U.S. and Mexico. Herdin said relative product margins improved through pricing, customs-duty refunds and mix effects. The company also continued cost-reduction measures, reducing headcount by 2% year over year to 9,019 employees. Staff costs decreased to €196 million from €208 million. “Profitability was primarily impacted by lower volumes rather than structural factors,” Herdin said, adding that Heidelberg expects measures already implemented to support a gradual profitability improvement during the fiscal year. Free cash flow was negative €77 million in the first quarter, compared with negative €68 million a year earlier. Operating cash flow was negative €55 million.