Heidelberger Druckmaschinen: Industrial Intelligence in Motion: HEIDELBERG’s Automation-Led Comeback

HEIDELBERG is making a strong strategic pivot into automation and fibre-based packaging, one of the most attractive end markets in industrial manufacturing today. This segment is backed by global megatrends such as rising population, sustainability regulation, and consumer goods growth. By integrating the full packaging workflow, from prepress to postpress, HEIDELBERG is positioning itself as an indispensable partner for packaging market players, including brand owners. Its acquisition of Polar Mohr’s IP and expansion into large-format and flexo machines show its intention to dominate the value chain. As brands seek greener packaging and supply chain automation, HEIDELBERG is aiming to offer a complete, scalable solution.

A key driver of Heidelberg’s packaging strategy is the global trend of ‘Paperization’, the shift from plastic to fibre-based packaging. By partnering with Solenis, Heidelberg is pioneering this transformation, enabling the industrial production of flexible, barrier-coated paper packaging, a milestone for the circular economy and a strong differentiator that positions Heidelberg as the preferred partner for brands and converters worldwide.

In a bold move, HEIDELBERG is applying its engineering capabilities and production capacities to the defense sector. With a memorandum of understanding in place with VINCORION, HEIDELBERG is co-developing power and control systems for security-critical applications. This aligns with the EU's push for strategic sovereignty and defense resilience. Initial development work is underway, with revenue potential upwards of €100 million if HEIDELBERG secures its position as a Tier 2 supplier in military and civil security infrastructure. Importantly, defense is less cyclical than printing and offers longer-term, government-backed contracts, providing new stability and visibility to revenues.

Through its partnership with VINCORION, Heidelberg is unlocking new opportunities in the field of safety-critical applications. While defense is currently a small yet strategically important part of the ‘Heidelberg Technology’ segment, this collaboration is still in its development phase. Leveraging its in-house expertise and capacities, Heidelberg is uniquely positioned to deliver tailored, plant-like solutions for the defense sector. This is particularly attractive for German defense companies, given Heidelberg’s existing production capabilities and value chain in Germany. Although defense is not yet a major revenue driver, it represents a promising growth field with significant long-term potential

HEIDELBERG’s operational turnaround is driven by its Zukunftsplan initiative. Most of the relevant personnel agreements have already been concluded, and the remainder are expected to be finalized shortly, enabling headcount reductions and streamlined operations at German sites. These measures, combining personnel and efficiency actions, are expected to generate more than €80 million in annual cost savings by FY28, with high certainty due to completed agreements.

Performance is already reflecting progress. Q1 EBITDA rose to 4.4% from –2.3% year-on-year, and further margin gains are expected through FY26. Alongside cost savings, the group is improving capital efficiency through Amperfied’s growing service contracts, such as the Siemens Energy deal to manage 200 charge points across 12 sites, showcasing its ability to scale software-driven recurring revenues alongside manufacturing efficiency.

• First VINCORION revenues and project validation: Moving from an MoU to tangible orders or deliveries in the defense segment would prove the viability of this new vertical and attract long-term investors looking for diversification.

• Amperfied: Project business growing with customers such as SAP and Siemens Energy; DC charging system available mid of next year. Strong potential to be part of ramp up of DC charging infrastructure.

• Achievement or upward revision of FY26 margin targets: HEIDELBERG is aiming for up to 8% EBITDA margins (highest margin in the last two decades). If Q4 or early FY26 guidance shows progress beyond this, it would justify a re-rating of the shares and show execution strength.

• Continued margin improvement in Q2 and Q3: HEIDELBERG’s Q1 margin rebound was strong, but analysts will be looking for consistent quarterly progress to confirm the turnaround has legs. Sustained improvement would enhance credibility and drive near-term sentiment.

• Integration progress from Polar Mohr acquisition: Early traction on the IP and post-press solutions integration could provide confidence in management's ability to execute bolt-on deals and deliver synergies quickly.

• Realisation of full €80m savings from FY28 onwards under Zukunftsplan: Achieving these savings would structurally reset HEIDELBERG’s profitability baseline. Investors will look for proof that cost efficiencies are permanent and scalable.

• Material contribution from non-print revenue lines: Packaging automation, emobility and defense could account for a much larger share of revenue in 3-5 years. If HEIDELBERG delivers here, it could change the narrative from legacy manufacturer to industrial-tech innovator.

Despite the promising trajectory in packaging, HEIDELBERG still relies on its traditional commercial printing segment, which is exposed to cyclical downturns. A potential slowdown in advertising, publishing, or macroeconomic conditions in Europe could reduce demand for commercial print systems and impact earnings volatility. To counter this, HEIDELBERG has increased its packaging revenue share consistently over the last years, consequently representing the majority of today’s business.

HEIDELBERG’s move into defense and industrial electronics is early stage, with execution risk driven by technology validation, regulatory approvals, and production scale-up. Delays or overruns could impact investor confidence and distract from core business priorities, with new talent and governance models required for smooth integration.

To mitigate risk, HEIDELBERG has recruited dedicated external teams to manage these ventures, and is building recurring revenues through long-term customer contracts, leveraging strengths in fleet management and public DC charging infrastructure.

Even as HEIDELBERG works to cut headcount and streamline operations, ongoing labour cost inflation, particularly in Germany, could erode gains. The company has historically struggled with a high fixed cost base, and future wage pressures or union demands may offset the benefits of restructuring. Furthermore, cost inflation could also limit its ability to attract or retain the specialised talent needed to drive growth in new technical domains like defense electronics and automation. Labour conditions in Germany are structurally a recurring challenge, and it can be expected that the current government will take measures to address them.