Reasons to be cheerful at Heidelberg - Indian Printer & Publisher

Cannon inkjet collab, healthy Drupa orders & Prinect Touch Free

The last time that I wrote about Heidelberg was just after the then CEO, Dr Monz, had taken the extraordinary step of resigning right before Drupa. Happily, my fears that Heidelberg would not have much to talk about at the show were proved wrong and the company went on to enjoy a highly successful Drupa, with plenty of visitors to its stand every time I was there, followed by reports of new incoming orders.

Heidelberg’s most recent figures are from this financial year’s first quarter, ending 30 June 2024, which shows healthy incoming orders of €701 million on the back of the Drupa trade show. On the flip side, sales in the first quarter were down from €544 million in Q1 2023 to €403 million in Q1 2024. This is largely due to customers holding back in the run-up to Drupa.

Fortunately I had a chance at Drupa to catch up with Dr. David Schmedding, who was appointed to Heidelberg’s management board earlier this year, in charge of Technology and Sales. He talked me through some of the new offerings, beginning with a quick overview, noting, “We have a couple of projects, mainly the new innovations, the Jetfire and and the XL106, the Boardmaster and packaging, these are all crowded. The VersaFire toner presses still have high interest, and for the Anicolor 75 there’s unbelievable interest as it’s something the customers can buy now in B2 for short runs.”

Heidelberg used the show to introduce the latest iteration of its Speedmaster XL106 B1 offset press, which is one of the fastest offset presses around with a maximum speed of up to 21,000 sph. Schmedding explained, “We as a technology and market leader have to be innovative and this is important to us and an important message to the market. We are able to impress with this performance. Not every customer needs this speed but there are a lot of customers, all the web-to-print houses as an example, because they have the job volume and the right job structure because the plates change automatically. And it’s modular so customers can choose to use it at 18,000 sph, and then pay a license fee to use it at the speed they need and to upgrade for peak performance.”

For me the most important announcement from the show was the joint partnership with Canon, which I’ve already covered in more detail. This will see Heidelberg rebadging Canon’s iX3200 B3 sheetfed press as its own Jetfire 50, and Canon’s upcoming B2 sheetfed VarioPress iV700 as the Jetfire 75. At a stroke, this gives Canon a strong offering in terms of inkjet but also tells us a lot about the state of the B3 market.

Schmedding explains, “Our customers were pushing us now for the last year to have a solution ready for sale, not one that we develop on our own that would take years. With Canon there is a system that’s well-established and proven.” He points out that Canon has already installed over 600 machines worldwide – “So the customers like the system.”

He adds, “And a big reason was the SX52 B3 offset market, especially in countries like Switzerland. These countries are looking for inkjet and in Switzerland we are the market leader by far so we have a really stable relationship. These customers are using our software and they are asking for inkjet as a replacement.” In other words, inkjet has already replaced offset printing in the B3 market, forcing Heidelberg to play catch-up and the company is clearly mindful of the risk that inkjet poses to the B2 offset market.

The B3 Jetfire 50 is available now and Heidelberg is hoping to deliver the first B2 inkjet machine by Q1 2026. Heidelberg will be able to use this next year installing the Jetfire 50 to understand the intricacies of the inkjet market and to develop the services needed before taking on the more demanding B2 model. Schmedding says, “And the B3 is a proven technology. It’s operated by our people and the training took just half a day to learn. We are looking for the opportunity in B2 and to see where the industry is and push the product to that market.”

This strategy has obviously worked as Heidelberg sold the first Jetfire 50 on the first day that Drupa opened, to a Swiss printer. Schmedding adds, “And now we have a product family in different areas, and all in sheetfed which is our core competence.”

This begs the obvious question as to why not work with Ricoh, which also has inkjet printers, and which Heidelberg is already working with on its VersaFire toner presses. Schmedding says that Heidelberg did discuss inkjet with Ricoh, but that Ricoh did not have a B3 sheetfed press, which was the major target for Heidelberg because of the immediate risk to the B3 offset market. He added, “We have a partnership today and we have a commitment for the VersaFire.” He says that Heidelberg already has over 3,000 VersaFire systems installed worldwide.

Schmedding says that Heidelberg is happy with the relationship with Canon, “This seems to be a perfect fit because we are coming from the sheetfed business and Canon from the digital and office copier. And Canon has their own sales channels whereas Ricoh uses distributors. So there is very little overlap because of the different market approaches.”

He adds, “And we have our own inkjet technology so we have a lot of experience with the Gallus One, which uses our R&D and our ink and our manufacturing.” There are currently more than 30 Gallus One presses installed.

He says that Heidelberg is open to looking at the continuous feed inkjet market. “We will start with sheetfed machines. We want to take it slowly and to learn our strengths. And also to work with customers that are well established because we need to understand where the customers are coming from and where to build up our core competencies in services.”

Heidelberg also announced at Drupa a new module for its Prinect workflow, Prinect Touch Free, which works with the Prinect Production Manager to route jobs through the workflow regardless of whether they are destined for digital or conventional output. The Touch Free module is cloud-based software that relies on some AI technology to determine the best production process for each job in terms of cost and required deadline. The software analyses the order backlog and production key performance indicators on an ongoing basis, learns from this, and optimizes the decisions made for future jobs.

It can take account of postpress requirements and if there are printing systems from third-party suppliers. It’s mainly designed to automate short runs but can also handle large order volumes. It factors in the automatic scheduling as well as schedule changes in the event of issues with machines or staff, and the color management is applied automatically to whichever output device is used.

To begin with, Prinect Touch Free will be based on several apps. This includes Pathfinder which works out all the production paths that are possible with the production technology available in the print shop. It draws up the relevant layouts and calculates the production costs for each possible path. Then there is Decision Maker which takes account of costs and the delivery date to determine the optimum production path for each job, but also indicates alternatives. In the Batch Building module, pending print orders are grouped together to minimize any machine changeovers and paper changes and also to optimize processes in postpress operations. Finally, Auto Scheduler is responsible for optimising the production schedule on an ongoing basis.

However, for me, the most important aspect of Heidelberg at Drupa was not the new equipment, but the change of management. I’ve already written about my surprise that the former CEO Dr Ludwin Monz would choose to resign just before such a major show, and indeed Monz cut a lonely figure at Drupa, wondering around the Heidelberg stand on his own. I can’t remember ever seeing a Heidelberg CEO at such an event who was not constantly surrounded by customers or journalists. It has been suggested to me that Monz was asked to leave, perhaps because he did not fit with Heidelberg’s culture. Even so, I think it would be a mistake to dismiss Monz entirely since much of what Heidelberg showed at Drupa was down to decisions that were taken under his watch.

The new CEO is Jürgen Otto, who has specialized in relatively short tenures to help turn companies around. So it was clear to me at Drupa that Heidelberg is hoping that Schmedding will ultimately take over. He has spent decades at Heidelberg and it seemed to me from our brief meeting that he understands the company and its customers and the challenges ahead.

Heidelberg certainly does have some challenges. The adjusted operating result or Earning Before Interest, Taxes, Deprecation and Amortisation, for the first quarter of this year fell by around €51 million to €–9 million compared to the adjusted figure for the same quarter of the previous year. The corresponding EBITDA margin was –2.3 percent, down from the previous year’s 7.7 percent, while the net result after taxes fell to €–42 million from €10 million. The free cash flow was €–103 million, down from €–27 million, which Heidelberg ascribed to the quarterly loss, the increase in inventories because of the high order intake and seasonal effects.

Tania von der Goltz, Heidelberg’s CFO, commented on the release of the Q1 figures, “Heidelberg felt the after-effects of the slump in orders from the third quarter of 2023/2024 in the first quarter.” She added, “Despite the expected improvements in sales and earnings in the second half of the year, we will continue to work on our costs and efficiency. We expect to achieve the previous year’s result in the current year.”

Heidelberg’s most recent annual report states that roughly 87% of the company’s sales are to overseas customers. This includes growing orders from the Asia Pacific region, notably China, which has started to pick up after the pandemic, and Japan, despite a strong yen. However, Heidelberg has also noted the conflicts in the Middle East and Eastern Europe but seems more concerned that “the differing political and economic interest of the USA and China entail considerable potential for conflict in terms of world trade, such as tariffs and import/ export restrictions.”

Since Drupa, Heidelberg is also cooperating with the multi-national chemicals company Solenis for paper packaging solutions. The idea is to develop a cost-effective process to integrate barrier coatings for fibre-based packaging directly into the existing roll-fed flexo printing process for use with the Boardmaster. A great many companies are also working in this area as such coatings can be used to allow paper-based products to handle liquids, oils and fats without requiring a plastic layer.

Schmedding pointed out, “The growing global demand for sustainably produced, cost-effective, recyclable and compostable packaging makes the flexible paper sector an attractive growth market for us.” He added, “In our collaboration with Solenis, we are aiming for the cost-effective production of packaging solutions for the food industry that are geared towards efficiency and sustainability.”

Heidelberg is also in the process of revamping its Print Media Center at the Wiesloch-Walldorf site as a 9,000 square meter demo and exhibition centre rebranded as the ‘Home of Print.’ This should be complete by next spring.

Heidelberg still has a number of issues to deal with, including its reliance on export markets, and on its largest shareholder, the Chinese company Masterwork, which may prove a liability given the current EU-China relationship. But it has a stronger management team than the last couple of years, and a well-rounded portfolio that is now anchored around its software development, including its Prinect workflow and its cloud offerings.

The company integrates, rather than owns, the toner and much of the inkjet technology that it is selling and I think that should be a long-term concern. That’s partly because the direction of travel is clearly towards inkjet, and inkjet technology would also open up new applications in industrial printing. But most importantly, because although Heidelberg successfully supports hybrid workflows, you need to own the technology to both determine where it is going and to truly profit from it.

Nonetheless, Heidelberg is a world-leader in offset and the Boardmaster has given Heidelberg a very strong stake in the flexo packaging market, which will certainly buy it some time.

Altogether this means that Heidelberg is once again a company that is worth keeping an eye on, which is a much better and stronger position than it appeared to be in earlier this year.

You can find further details on the company and its products from heidelberg.com.

First published on the Printing and Manufacturing Journal on 27th October 2024. Republished by permission.

Just past the middle of 2024, we can see that the Indian economy is resilient but the trajectory of the growth is still uneven. Consumption is erratic but in our industry while newspapers are still down, the book publishing and printing industry are building up capacities.

Indian Printer and Publisher founded in 1979 the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup, created the category of privately owned B2B print magazines in the country. And by its diversification in packaging, (Packaging South Asia), food processing and packaging (IndiFoodBev) and health and medical supply chain and packaging (HealthTekPak) and its community activities in training, research, and conferences [Ipp Services, Training and Research www.ippstar.org] the organization continues to create platforms for quality information, data, technology insights and events.

India is a large and tough terrain and while its book publishing and commercial printing industry have recovered and are increasingly embracing digital print, the Indian newspaper industry needs to recover its credibility and readership. The signage industry is slowly recovering and shifting to digital billboards. New technologies such as digital 3D additive printing, digital textiles, and industrial printing are coming onto our pages. Trade media will have to adapt with agility to keep up with new business and technical information needs.

India is one of the fastest growing economies in nominal and real terms – in a region poised for the highest change in year to year expenditure in printing equipment and consumables. Our 2025 media kit is getting ready, and it is the right time to recalibrate your role in this dynamic market – to emphasize your visibility and relevance to existing customers and turn potential markets into conversations.

Naresh Khanna – 11 September 2024