Heidelberg Druck’s Unlikely Bet: Printing Presses to China, Drone Defenses to Ukraine – Stock Up 15%

Heidelberger Druckmaschinen rallies 15% as it moves core production to China and expands into drone-defense systems, but warns of deep losses from upfront investments.

The market has handed Heidelberger Druckmaschinen a sharp rally, even as the company warns of deep losses ahead. Shares closed at €1.58 on Friday, surging nearly 15% over the week, after the group unveiled a sweeping strategy that shifts core production to China and accelerates a move into drone-defense systems. The gains pushed the stock back above its 50-day moving average of €1.47, a technical milestone that had capped recent attempts to recover.

The rally comes despite a forecast that the current financial year will end with a double-digit million euro loss. Management blames that shortfall on heavy upfront investments in entirely new business lines – a deliberate “dual-use” pivot that positions the printing machinery veteran as a player in defence and charging infrastructure. The new subsidiary, HD Advanced Technologies, is tasked with bundling those industrial capabilities and fast-tracking market entry.

In the fiscal year just closed, revenue edged up to nearly €2.3 billion and net profit climbed to €15 million. But the operating margin slipped to 6.6%, missing the company’s own target, from 7.1% a year earlier, weighed down by an unfavourable product mix and currency effects. Start-up costs in the fledgling defence division added further pressure.

To counter that downward drift, the management team is taking a knife to its cost base. Production of the iconic Speedmaster printing press will be moved entirely to China, while a new facility in North Macedonia is being built to drive even deeper savings. German plants are shedding jobs in parallel. The goal: push the EBITDA margin back above the 7% threshold.

At the same time, Heidelberg is charging into the defence sector. A joint venture named ONBERG, formed with the US-based drone-tech company Ondas, has signed a letter of intent with a Ukrainian enterprise at the ILA Berlin airshow to develop anti-drone systems. The partnership is the clearest signal yet that the company is serious about turning its mechanical engineering know-how towards military applications.

Analysts have begun revising their models to reflect the restructuring and the defence pivot. Warburg Research lifted its price target to €1.60 from €1.40, while keeping a “Hold” rating. Analyst Stefan Augustin noted that the planned margin improvements are a positive catalyst. Among five analysts covering the stock, three now rate it a “Buy,” with a median price target of €2.25.

Chart watchers now look to the next hurdle. The 200-day moving average, currently at €1.75, stands as the key resistance level. If the stock can hold its recent gains and break through that line, it would mark the establishment of a fresh uptrend.

For shareholders, however, there is no near-term reward. The upcoming annual general meeting, to be held virtually, will once again propose skipping a dividend. The company is ploughing every available euro into a radical transformation – one that is as risky as it is ambitious.