Heidelberger Druckmaschinen Aktiengesellschaft (ETR:HDD) outlined plans for a strategic partnership with Manroland Sheetfed, describing the transaction as a move to expand its global service capabilities, strengthen recurring revenue and improve profitability in its print and packaging operations.
During a conference call with investors and analysts, Jürgen Otto, CEO of Heidelberger Druckmaschinen, said the deal brings together two long-established brands in the printing industry. Heidelberg is 175 years old, while Manroland has been in the market for more than 150 years, he said.
Heidelberg Targets Recurring Revenue Growth
In the presentation, Heidelberg said the Manroland transaction is intended to support the stabilization of the supplier side while expanding customer reach, strengthening the service and spare parts business, and unlocking growth potential.
The company emphasized the importance of increasing recurring revenue from service and life cycle businesses. Heidelberg said recurring revenue provides greater visibility, reduces exposure to macroeconomic cyclicality and offers higher margins that are expected to support future group profitability.
“Overall, we see strong potential for this partnership to create long-term, sustainable stakeholder value,” the company said during the call.
Manroland Assets to Be Integrated
Heidelberg said it will integrate Manroland’s customer base, global service network, logistics operations and installed base of more than 3,000 machines. The company also cited Manroland’s intellectual property, technical documentation and engineering expertise as assets that will allow Heidelberg to continue supporting customers and develop its service, spare parts and consumables businesses.
Manroland has a presence in 35 countries and approximately 600 employees. Heidelberg said these assets are a “perfect fit” and will help streamline its global footprint.
Financial Contribution and Synergies
For the current fiscal year, depending on the closing date, Heidelberg expects Manroland operations to contribute a mid-double-digit euro million amount to group sales. The company said it does not expect an impact on its operating guidance for the year.
Following integration, which Heidelberg said is planned over a two-year period, the company expects the Manroland operations to generate a stable annual contribution of about €100 million in sales. Heidelberg said its EBIT contribution ambition is approximately €10 million to €15 million per year after full integration.
The company also said there is additional synergy potential from the sale of Heidelberg systems, with annual revenues in the mid-double-digit euro million range, plus recurring consumables business in the low-double-digit euro million range. These contributions are expected to come with margins typical for those businesses.
Integration Costs and Workforce Plans
During the question-and-answer portion of the call, Volker Herdin, head of finance at Heidelberger Druckmaschinen, said there will be a difference between EBIT and EBITDA during the integration period because of costs related to synergies.
Herdin said Heidelberg will not take over all employees on a long-term basis, though it will need some employees during the intermediate integration period. After two years, the company plans a “slim integration plan” that includes letting go of a certain percentage of employees. He said those costs will be reflected in EBIT for the year but not in adjusted EBITDA.
Large Format and China Opportunities
In response to an analyst question about intellectual property and large-format machines, Heidelberg said it is evaluating how to continue in the very large format segment. The company said the portfolio is “needed for the market,” but no decision has been made on how it will proceed.
Heidelberg also highlighted China as a potential growth area. In response to a question about combining Manroland’s organization with Heidelberg’s strong manufacturing and market footprint in China, the company said the fit was “100%” and that the transaction could accelerate growth in the market.
The call concluded after a brief question-and-answer session, with Otto thanking participants for their attention.
About Heidelberger Druckmaschinen Aktiengesellschaft (ETR:HDD)
Heidelberger Druckmaschinen Aktiengesellschaft, together with its subsidiaries, engages in manufacture, sale, and dealing of printing presses and other print media industry products in Europe, the Middle East, Africa, Asia/Pacific, Eastern Europe, North America, and South America. The company operates through Print Solutions, Packaging Solutions, and Technology Solutions segments. It offers printing machines, including digital, offset, narrow web, screen, and inline-flexo printing, as well as remarketed equipment; and finishing equipment comprising cutting, die-cutting and embossing, folding, inspection, folding carton gluing, hot foil stamping, and shingled folding.
