Heidelberg moves to cut costs

A package of cost cutting measures to be implemented by Heidelberg’s management with immediate effect. The main focal points are reducing R&D expenditures, restructuring postpress packaging activities, significantly increasing the proportion of purchases made outside the euro zone, strengthening international production sites, and achieving a substantial reduction in structural costs.

Overall, these measures are intended to result in savings of around €100M by financial year 2010/2011. The aim is to achieve a large proportion of this - €75M - within the next 18 months. The package of measures will initially increase costs a further €70M in the current financial year 2008/2009 and another €30M until financial year 2010/2011.

"In addition to the drupa show, which can be deemed satisfactory overall, we have also been putting a great deal of work into our medium to long term strategy," says Heidelberg CEO Bernhard Schreier. “This has made it clear that the increasing costs call for a further significant adjustment to our cost structures. The package of measures adopted takes into account all key areas.”

Heidelberg will be making immediate changes to its R&D strategy. Improving efficiency and pooling development activities should result in short term savings of at least €25M. Consolidating R&D locations will also help cut costs. In the medium term, R&D expenditures are to be cut to less than five per cent of total sales.

Over the next three years, the group will be restructuring its postpress packaging business. In the entire postpress sector the operating result is to be increased by €20M until 2010/2011. This is to be achieved by consolidating production capacities, transferring certain operations to Slovakia, and restructuring R&D activities in this product area.

The entire package of cost cutting measures will also impact on the workforce: around 500 jobs are to be shed worldwide by the end of financial year 2010/2011.

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