Heidelberg goes digital! Capital Markets Day April 10, 2018 Frankfurt Smart Print Shop Digital Packaging Subscription
Agenda 9:00 Welcome 9:30 Strategy Rainer Hundsdörfer, CEO 9:45 Smart Print Shop Stephan Plenz, CTO 10:05 Digital Packaging Montserrat Peidro-Insa, Head of Digital Print 10:25 Q&A 10:45 Break 11:05 Digital Business Models Ulrich Hermann, CDO 11:25 Customer perspective Moritz Weig, Managing Proprietor of WEIG Packaging 11:45 Q&A 12:05 Growth Financing Dirk Kaliebe, CFO 12:25 Wrap up + Q&A
Rainer Hundsdörfer, CEO Strategy Smart Print Shop Digital Packaging Subscription
Our roadmap is clear. Important milestones achieved. 4
The global print production volume. Is growing. bn 409 417 427 Sheetfed Flexo Digital Others 2016 2019 2022 Source: Heidelberg estimate August 2017, industry statistics, PIRA, Jakkoo Pöyry, Primir (GAMIS), Global Insight Digital: Only Digital Production Devices are taken into consideration ----- *Base Year 2009 5
Our potentials. Growth through digital transformation and technology leadership. Consumables 8 bn* Subscription Sheetfed offset 2.4 bn* Digital 2.5 bn** Smart Printshop Digital Packaging Addressable market Growth potentials Heidelberg solution * Accessible market for Heidelberger Druckmaschinen, excluding postpress 6
Our medium term targets. Sustainable & profitable growth Digital print portfolio ( +200 million) Digital business model (equipment consumables service: +250 million) Digital platforms ( +50 million) Digital business model / Volume growth ( +50 million) Cost efficiency (operational excellence: +50 million) Group targets by 2022: Sales volume of up to 3 billion EBITDA between 250 and 300 million Net profit > 100 million 7
Stephan Plenz, CTO Smart Print Shop
Growth opportunities: approx. 200 million sales potential in 5 years 9
Heidelbergs Target section Print Production Volume. Stable in Commercial growth in Packaging & Label. Development of the global Print Production Volume by segments (PPV in bn) 409 +0,6% 417 +0,8% 427 111 108 107-0,8% p.a. -0,4% p.a. 24 27 +3,4% p.a. +3,3% p.a. 108 +2,7% p.a. 117 +2,6% p.a. 126 166-0,2% p.a. 165-0,1% p.a. 164 2016 2019 2022 30 Label Labels Packaging Folding Carton Flexibles Commercial Catalogs Advertising Financial / Legal Directories Others Label Packaging Commercial Source: Heidelberg estimate August 2017, industry statistics, PIRA, Jakkoo Pöyry, Primir (GAMIS), Global Insight Digital: Only Digital Production Devices are taken into consideration ----- *Base Year 2009 10
Heidelberg goes digital. Simply Smart. Navigated and autonomous Printing Increased availability and productivity Innovative ways of cooperation Process Optimization Push to Stop Performance Plus Predictive Monitoring ecommerce Heidelberg Assistant Subscription 11
Automation and integration on a new level. Prinect. Driving the Smart Print Shop. Equipment Consumables Customer Service 12
Reducing touchpoints. Prinect. Driving the Smart Print Shop. Today 15 touchpoints 1. Estimating 2. Job creation in MIS including job ticket 3. Prepress PDF processing or native artwork 4. Imposition 5. Proofing and customer approval 6. Plate imaging 7. Production planning 8. Plate sorting and delivery to the pressroom 9. Assignment of ink and paper 10. Press including production data acquisition 11. Postpress including production data acquisition 12. OK sheet approval 13. Quality control 14. Packaging and shipping 15. Billing With Prinect 4 touchpoints 1. Estimating (end-to-end) 2. Planning 3. Press and postpress 4. Shipping and billing 13
Big Data & real-time transactions. The Heidelberg Cloud: the largest PMI database. More than 10.000 Heidelberg machines and 15.000 Prinect modules connected Big Data combined with central analytical and predictive logic to provide the base for Heidelberg s Predictive Monitoring Performance Plus Heidelberg Assistant: Expert know-how at your fingertips Transparency about availability and performance of your print shop 14
Benchmark analyze for more performance. The Heidelberg Cloud: the largest PMI database. Global benchmark 1 OEE 10.000 over average net impressions 1) Results based on avg. values from Oct17-Dec17 15
Smart Print Shop full transparency. Heidelberg Assistant. Print Shop Availability and productivity of equipment Shopping Matching consumables and service parts Support Access to service contracts Administration Individual configuration 16
Heidelbergs Target section Print Production Volume Sheetfed. Growth markets Packaging & Label. Development of the global Print Production Volume by technology (PPV in bn) 409 +0,6% 417 +0,8% 427 142-2,3% p.a. 132-2,0% p.a. 124 65 +6,0% p.a. 77 +4,4% p.a. 88 +3,0% p.a. +3,0% p.a. 52 57 63 +0,1% p.a. 150 150 +0,4% 152 p.a. 2016 2019 2022 Others Digital Flexo Sheetfed Source: Heidelberg estimate August 2017, industry statistics, PIRA, Jakkoo Pöyry, Primir (GAMIS), Global Insight Digital: Only Digital Production Devices are taken into consideration ----- *Base Year 2009 17
Technology leadership for packaging & label printing. The new Speedmaster generation. XL 75 Anicolor XL 145 and XL 162 CX 75 and XL 75 CX 102 and XL 106 18
Technology leadership. We have to completely change our mindset. Today we initiate processes and start them actively. Push to Start 19
Technology leadership. We have to completely change our mindset. Tomorrow processes run autonomous. We only interrupt if necessary. Push to Stop 20
Push to Stop is part of the new Speedmaster generation. The patented Intellistart 2 makes the difference. New Intellistart 2 with Intelliguide Calculates the fastest make-ready strategy Guides the operator through the individual steps on the press 21
More than 400 installed machines using Push to Stop. Acket increased productivity by 20%*. Tom Acket: I m a big fan of numbers: measuring means knowledge. We document the performance of our presses using scoreboards, and we re always right up there in any benchmark studies. Our long-standing experience with Heidelberg products has been only positive, and we don t expect that to change with our three Speedmaster XL 106 machines. Our latest flagship is a Speedmaster XL 106-6 with double coating. It is equipped with the latest Push to Stop technology and in this way shows the operator the quickest means to the end. Together with the ability to perform the makeready processes in parallel thanks to Hycolor Multidrive, it has enabled us to improve our productivity by 20% in comparison with an older machine from the another supplier. So we are optimally prepared for the future. * Compared to a competitive machine 22
More than 400 installed machines using Push to Stop. Czech printer Triangl significantly increases OEE. Speedmaster XL 106-8-P Installed: Feb 2015 Average run length: 10,000 sheets after 24 months 172 million/ OEE 54% March 2017 7,6 million/ OEE 58% 90 mil p.a. Speedmaster CX 102-5+L Installed: Feb 2017 Average run length: 4,400 sheets March 2017 5,9 million/ OEE 50% 70 mil p.a. Overall Equipment Effectiveness (OEE) 23
Montserrat Peidro-Insa, Head of Digital Print Digital Packaging
Heidelbergs Target section Print Production Volume Digital. Strong growth in Packaging & Label. Development of the global Print Production Volume by technology (PPV in bn) 409 +0,6% 417 +0,8% 427 142-2,3% p.a. 132-2,0% p.a. 124 65 +6,0% p.a. 77 +4,4% p.a. 88 +3,0% p.a. +3,0% p.a. 52 57 63 +0,1% p.a. 150 150 +0,4% 152 p.a. 2016 2019 2022 Others Digital Flexo Sheetfed Source: Heidelberg estimate August 2017, industry statistics, PIRA, Jakkoo Pöyry, Primir (GAMIS), Global Insight Digital: Only Digital Production Devices are taken into consideration ----- *Base Year 2009 25
Leading digital technology. The Fire-line portfolio. Primefire Versafire Omnifire Labelfire 26
A brief story about digital adoption. Now it is the turn for packaging. 27
Brands generate demand for digitally printed jobs. Now it is the turn for packaging. Sales effectiveness Segmented product offering and message for maximum sales impact Differentiation and best shelf appeal Quick time to market to adapt to consumer demand Personalized experiences to gain customer engagement Supply chain efficiencies Produce on demand minimize inventories Fast reaction to last minute changes Quick prototyping and agile product development Additional security Add traceability elements to each product Add security features to each box against black market Compliance with special regulations (ie. Pharma 2019) 28
Heidelberg industrial digital print production. Primefire 106. Accelerating business growth through dependable high quality performance 29
Dependable high quality performance. Primefire 106. Top quality at run length 1 Industrial inkjet printing up to 75 x 106 cm format size with full flexibility. Control of >12 billion drops per sheet. Water based inkjet system with Swiss Ordinance conformity. Best conditions for low migration products. 7 process colors. Cyan, magenta, yellow, black, orange, green, violet. Pantone color gamut coverage ~95% due to Heidelberg Multicolor Technology of 30
Field of application. Primefire 106. Folding carton converters Pharma converters Calendar, Poster and Cards producers Publishing houses 31
The folding carton market. Primefire 106. Applications with high finishing Wine & Spirits Pharma OTC Cosmetics and Body care Specialties Applications with low finishing Pharma Technically Food & Dairy products Home Care Drinks small medium volume large 32
The folding carton market potential. Primefire 106. Total folding carton market expected to be 1,200 to 1,400 companies by 2022 Applications with high finishing Applications with low finishing Wine & Spirits Cosmetics and Body Care Final Pharma Primefire fits 35% of companies. Addressable market of ~550 machines OTC (penetration rate = 1.3 machines/company Primefire Pharma MVP* fits about 15% companies. Addressable market of ~180 machines Technically Food & Dairy products Specialties Home Care Drinks small medium volume large *Minimum viable product 33
Industrial digital printing on track. Primefire 106. December 2015 First 1c print May 2016 Drupa launch June 2017 1. beta unit installation finished Folding carton converters Jan 2018 2. beta unit installation finished Pharma converters 34
Booked out for the next two years global presence. Primefire 106. #6 #1 #1 #5 #1 #1 #1 #5 #2 35
Label printing. Digital label business is growing. Market is changing 2/3 of all label presses sold in Europe are digital presses Digital printing already holds about 10% share (value) of label business Inkjet printing is expected to grow faster than the electrophotography because of its greater potential for development Almost half (46%) of respondents to the FINAT Digital Survey 2017 confirm that 100% of digitally produced jobs require further processing Source: FINAT Digital Label Study 2017 and Smithers Pira 2017 36
From the file to the finished label in only one pass. Gallus Labelfire 340. First industrial digital inline converting system Jointly developed by Gallus and Heidelberg Innovative UV drop-on-demand inkjet technology Leading-edge performance with 50m/min at 1,200 dpi More than 18 machines already sold to customers worldwide 37
New standard for cost efficiencies. Gallus Labelfire 340. Lowest total cost for high quality labels 4c+1x white, Low Coverage 94 x 72mm EPM Mode 142 x 45mm 4c, Avg. Coverage 144 x 84mm 4c, High Coverage 94 x 72mm 14,00 12,00 10,00 8,00 6,00 4,00 2,00 0,00 Total Cost per 1000 Labels [EUR] Competitor HP 6800 + ABG Digicon Gallus Labelfire 340 12,00 10,00 8,00 6,00 4,00 2,00 0,00 Total Cost per 1000 Labels [EUR] 20,00 15,00 10,00 5,00 Total Cost per 1000 Labels [EUR] 14,00 12,00 10,00 0,00 0,00 HP 6800 + Gallus Competitor HP 6800 + Gallus HP 6800 + Competitor Competitor ABG Digicon Labelfire 340 ABG Digicon Labelfire 340 ABG Digicon 8,00 6,00 4,00 2,00 Total Cost per 1000 Labels [EUR] Gallus Labelfire 340 Assumptions: 0.01 click, per color, 2 clicks per print frame Run-length: 20 000 labels Competitor (press and finishing equipment): labor, setup time & waste 38
Series production in Wiesloch-Walldorf. Gallus Labelfire 340. 39