Heidelberg Achieved Sales of Euro 2.9 Billion in the First 9 Months of FY 02/03; Investors in Key Markets Remain Very Hesitant.

Business Editors

HEIDELBERG, Germany--(BUSINESS WIRE)--Feb. 4, 2003

Company Lowers Its Expectations for the Full Fiscal Year

In the first nine months (April 1 to December 31) of fiscal 2002/2003, Heidelberger Druckmaschinen AG (Heidelberg) achieved group-wide sales of Euro 2.9 billion (previous year: around Euro 3.6 billion).

Incoming orders were Euro 3.1 billion (previous year: Euro 3.5 billion). In spite of a slight improvement in the third quarter, the Company did not see any substantial recovery in the major markets.

In the period under review, the operating result was Euro 48 million (previous year: Euro 161 million), while the net result was affected by the non-recurring restructuring expenditures of Euro 126 million in the third quarter and amounted to Euro -82 million (previous year: Euro 84 million).

In view of the latest economic and market forecasts, the Company no longer expects to be able to achieve the sales and earnings objectives which it had set itself for the current fiscal year. The Heidelberg Management Board is expecting to achieve total sales of between Euro 4.1 and 4.2 billion for the current fiscal year. In spite of the clearly positive operating result, due to the non-recurring restructuring expenditures, the net profit will be between Euro -50 and -70 million. Heidelberg will continue to adjust production capacities to the order situation, among other things through short-time work at its sites, particularly in Wiesloch, Amstetten and Brandenburg. The Company does not expect any short-term improvement in demand for the coming fiscal year. The earnings capacity of the Heidelberg Group will be enhanced primarily by a sustained improvement in the cost structure.

Issuer's information/explanatory remarks concerning this ad-hoc-announcement:

Heidelberg achieved Sales of Euro 2.9 Billion in the first nine Months of fiscal year 02/03

-- As expected, business running below the level of the previous year

-- Investors in key markets remain very hesitant

-- Company lowers its expectations for the full fiscal year

In the first nine months (April 1 to December 31) of fiscal year 2002/2003, Heidelberger Druckmaschinen AG (Heidelberg) achieved group-wide sales of Euro 2.9 billion (previous year: around Euro 3.6 billion). Incoming orders during the same period were a good Euro 3.1 billion (previous year: Euro 3.5 billion), and during the third quarter exceeded the level for the same period of the previous year. "In spite of the slight improvement in the third quarter, we did not see any substantial recovery in our key markets - the USA, Germany and Brazil", said Bernhard Schreier, CEO of Heidelberger Druckmaschinen AG. The main reason for the weakness in demand was the continuing reticence of the advertising market, causing many publishing houses and printshops to defer investment decisions.

In the period under review, the operating result was Euro 48 million (previous year: Euro 161 million). The main driver here was the continuing good earnings power in the Sheetfed Division. The net result was affected by the non-recurring restructuring expenditures of Euro 126 million incurred during the third quarter. This considerably reduced the net result, which amounted to Euro -82 million (previous year: Euro 84 million). "Business in the Web Systems Division was particularly poor as a result of the exceptionally weak demand for investment goods in the USA, this Division's key market", said CFO Dr. Herbert Meyer. "On the positive side, however, we managed to considerably reduce losses in the Prepress Division in the first nine months, and the stable market development in Eastern Europe has continued."

As of December 31, 2002, the Heidelberg Group had a workforce of around 24,700 worldwide (excluding the staff from the newly consolidated Gallus Group and IDAB WAMAC International AB, the figure was around 24,200). Adjusted for changes, this represents a reduction of around 1,500 employees compared to the previous year.

Status of the Efficiency-Enhancing Program

The implementation of the efficiency-enhancing program approved in October last year is running according to schedule. At most of the sites affected, concrete measures have already been drawn up with the works councils, and some have already been implemented. To cover this, non-recurring expenditures totalling Euro 126 million were posted for the period until December 31, 2002. This total is expected to rise to around Euro 140 million by the end of the fiscal year. The program will take effect during the next fiscal year, delivering savings of Euro 200 million per year. "We are working at high pressure to achieve sustained improvements in the Group's cost structure through the measures we have introduced", said Dr. Herbert Meyer.

Prospects for fiscal 2002/2003

In view of the latest economic and market forecasts, the Company no longer expects to be able to achieve the sales and earnings objectives which it had set itself for the current fiscal year. The Heidelberg Management Board is expecting to achieve total sales of between Euro 4.1 and 4.2 billion for the current fiscal year. In spite of the clearly positive operating result, due to the non-recurring restructuring expenditures, the net profit will be between Euro -50 and -70 million. Heidelberg will continue to adjust production capacities to the order situation, among other things through short-time work at its sites, particularly in Wiesloch, Amstetten and Brandenburg. The Company does not expect any short-term improvement in demand for the coming fiscal year. The earnings capacity of the Heidelberg Group will be enhanced primarily by a sustained improvement in the cost structure.

The table with the figures is available on the Press Lounge at http://www.heidelberg.com.

Important note

This Press Information contains statements about future development that are based on assumptions and estimates by the management of Heidelberger Druckmaschinen Aktiengesellschaft. Even if the management is of the opinion that these assumptions and estimates are accurate, future actual developments and future actual results may differ significantly from these assumptions and estimates due to a variety of factors. These factors can include changes to the overall economic climate, changes to exchange rates and interest rates and changes in the graphic arts industry. Heidelberger Druckmaschinen Aktiengesellschaft provides no guarantee that future developments and the results actually achieved in the future will agree with the assumptions and estimates set out in this press release and assumes no liability for such.

WKN: 731400; ISIN: DE0007314007; Index: MDAX

Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Bremen, Dusseldorf, Hamburg, Hannover, Munchen und Stuttgart