Operating income at Heidelberg Group’s
financial services division increased by €7 million year on year to
€18 million at March 31 2011.
The international printing specialist
attributed this growth to improved underlying conditions in the
sector combined with intensive management of accounts
receivable.
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The growth is despite sales dropping to €16
million, compared to the previous year’s figure of €19 million.
The sales decrease is on the back of a
significant decrease in the size of the Financial Services
division’s leasing and asset finance portfolio. The portfolio was
€178 million at the end of March 31 2011, compared to €212 million
at the end of the previous financial year.
Financial Services Division Head Stephan
Knuppertz told Leasing Life that the decrease is part of
a
strategy to free up capital by financing more through third
parties. “Considering machines have an eight-year life cycle, we
don’t want to tie up cash to the maximum amount by financing too
much through our captive if we don’t need to,” he said.
Knuppertz added: “We tackle the deals that no
one is able to do, for example, if it’s in a country that the third
party is not comfortable with or the customer’s business goes
beyond what a third party finance company can deliver.”
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By GlobalDataKnuppertz added that the low profit and highly
geared nature of the business might deter some third parties from
financing its assets. “It’s important to understand the credit,
which may be a difficult one. Typically the asset holds value well
in an industrialised country but the customer may not have good
numbers.
“Where the third party cannot finance the
equipment for the customer then we are able to provide those
solutions through our captive finance arm, called Print Finance
Company, if the investment makes sense,” he said.
Commenting on the company’s increased
investment in collection management resources, Knuppertz said this
has helped to improve customers’ payment behaviour, thereby leading
to fewer arrears. “Some risk reserves, which the company
built up during economically difficult times for when the customers
were in payment arrears, have been released now that the situation
has improved,” he said. “This has positively impacted on the
company’s profit and loss statement.”
BRIC building
Currently, Brazil is
Heidelberg Financial Services single biggest portfolio, making up a
third of the total portfolio. Australia and Germany collectively
make up a 30% of the total portfolio.
In China, where the company has a network of
seven staff, Heidelberg Financial Services has closed several
framework agreements with third parties worth €200 million in third
party finance deals, accounting for 450 deals. The deals start at
€100,000, with the maximum size being €2.5 million. “We have good
partners with SG, UniTrust, Wing Hang Bank and Dah Sing Bank and
others in this in this market,” said Knuppertz.
Group results
Heidelberg Group’s operating
income was positive for first time in two years at €4 million.
