Intergraf GA Helsinki 2007 Heidelberg Nordic Baltics Esa

Intergraf GA / Helsinki 2007 Heidelberg Nordic - Baltics Esa Saarinen HNB Commercial Director

Intergraf GA helsinki Heidelberger Druckmaschinen AG Company Profile Heidelberg 2007

Intergraf GA / Helsinki 2007 Heidelberg is market and technology leader in sheetfed offset • World-wide technologically leading supplier of sheetfed offset solutions • Sole supplier of seamlessly networked solutions from prepress to postpress • Customer and market closeness as well as a strong service orientation result in clear differentiation from competition • More than 200, 000 customers in 170 countries

Intergraf GA / Helsinki 2007 The Heidelberg portfolio: Hardware, Software and Brainware around sheetfed offset printing process Internet Customers/ suppliers Delivery Prepress Postpress/ Finishing Soft- and Hardcopy Proofs Offset Printing Systems and Services Ct. P Consulting and Training

Intergraf GA / Helsinki 2007 14 Production and Development Sites Amstetten (D) Bad Homburg (D) Brandenburg (D) Heidelberg (D) Kiel (D) Langgöns (D, Gallus) Leipzig (D) Ludwigsburg (D) Mönchengladbach (D) Wiesloch (D) Nove Mesto (CZ) St. Gallen (CH, Gallus) Eksjö (S) Sidney (USA) (in construction)

Intergraf GA / Helsinki 2007 The Heidelberg Team • Approx. 19, 000 employees worldwide • Thereof in Germany: 11, 700 • At Heidelberg and Wiesloch: 8, 000 As at March 31, 2005 • Over 1, 500 employees in R&D

Intergraf GA / Helsinki 2007 Research and Development Yearly investments in R&D of approx. 200 Mio. Euro (6 % of sales) – Around 1, 500 employees in R&D world-wide, thereof 350 software developers – 5, 500 patents in Germany and abroad – Intensive involvement of customers in R&D projects – International networking with universities, research establishments and suppliers

Intergraf GA / Helsinki 2007 Research & Development

Intergraf GA / Helsinki 2007 Service • More than 250 agencies in over 170 countries stand for customer-tailored on-site service. • Around 3700 service experts work around the clock serving customers. • The World Logistics Center ensures fast and high availability of service parts. • Web-based Remote Service enables press inspections and maintenance without the need of an service technician on-site. • The world-wide branches of the Print Media Academy provide training for our customers and employees

Intergraf GA / Helsinki 2007 Key Figures FY 2006/ 2007 Incoming Orders 3, 853 Mio. Euro Sales 3, 806 Mio. Euro Sales abroad more than 85 % Operating result 362 Mio. Euro Year‘s net earnings after taxes 263 Mio. Euro Employees world-wide • Name des Autors • Datum • Dateiname • Seite: 19, 171

Intergraf GA / Helsinki 2007 Heidelberg Nordic&Baltics • Employees 211 employees, of which 45 in the Baltics and 166 in the Nordics Number of employees Denmark Sweden Finland Lithuania Latvia Estonia 66 56 44 13 18 14 • Sales performance FY Sales 2006 129, 7 mill. EUR 2007 126, 5 mill. EUR

The sky is falling Global Indicators Intergraf GA / Helsinki 2007 Print production volume decoupling from gross domestic product (GDP) Index (1998 = 100) GDP & Print Production Volume (PPV) (value-based) Global Actual 1998 -2004; Forecast 2005 -2010 Forecast GDP CAGR: 3, 4% Real PPV CAGR: 2, 5% Nominal PPV CAGR: 4, 7% Years Source: Industry statistics, PIRA, FAO, Jaakkoo Pöyry, Global Insight, UBS, CD-SD estimate Print Production Volume w/o print for manufacturing, corrugated packaging, metall packaging, glass packaging

The sky is falling Global Indicators Intergraf GA / Helsinki 2007 Online advertising and promotion growing at the expense of print Media Budget Allocation 2006 -2007 Allocate new spending for offline 5% Online spending to grow or shrink with overall marketing budget 23% Reallocate from online to offline 2% Allocate new spending for online Promotion 41% Reallocate from offline to online 29% Total: 227 Respondents Source: Economist Intelligence Unit Survey of 300+ Senior Executives, Worldwide, February 2006

The sky is falling Intergraf GA / Helsinki Global Indicators 2007 Progress in display technologies substituting print

The sky is falling Intergraf GA / Helsinki Global Indicators 2007 Traditional printing not a sexy business to be in

Print is alive and well Market Trends Intergraf GA / Helsinki 2007 On a global basis, the printing business is recovering, after a tough start in 2000 Development of Global Printing Industry, Indexed (2000 – 2006) Value of Exported Sheetfed Offset Êquipment Value of Print Source: Import / Export VDMA, Global Insight

Printers have to adapt Adapt Business Model Digital Print Intergraf GA / Helsinki 2007 Digital printing continues to increase in importance, but it‘s a long process! CAGR‘ Print Production Volume (Mio Euro) (2000 – 2020) Development of Printing Process Shares by Print Production Volume (Mio €) (Actual 2000 -2005; Outlook: 2006 -2020) 600. 000 Total 1, 4 % 500. 000 Other 0, 7 % 400. 000 Digital 10, 3 % 300. 000 Sheetfed offset 0, 9 % 200. 000 100. 000 Web offset 0, 4 % 0 2004 Actual 2006 2008 2012 Forecast SOURCE: M-IM Estimates, PIRA 2002, GAMIS 2002, Industry Statistics, Jaakko Pöyry 2002 ‚CAGR is Compound Annual Growth Rate 2016 Projection 2020

Intergraf GA / Helsinki Paper consumption recent years 2007

Intergraf GA helsinki GDP growth recent years 2007

Intergraf GA / Helsinki Inflation recent years 2007

The sky is falling Local Indicators Intergraf GA / Helsinki 2007 In addition, profitability has been a real challenge Printing Industry in Finland Leading 100 Printers by Profit/Loss 2006 25 Profitable Number of Companies 20 15 10 5 0 -20% -16% -15% -11% -10% -6% -5% 0% 1% 5% Profit Range (Percent) Source: Balance Consulting Oy, Ranking Report Printing Houses, January 2007 6% 10% 11% 15% > 15%

Print is alive and well Market Trends Intergraf GA / Helsinki 2007 Finland is expected to enjoy its share of growth in print production volume through 2010, coming from a low base… Development of Print Production Volume (billion €) (Actual 2005; Forecast 2010) +11% (CAGR: 2, 2%) 2005 2010 +12% (CAGR: 2, 3%) +13% +8% (CAGR: 2, 5%) (CAGR: 1, 5%) (2. 3 bn €) Print Per Capita (€) 2005 58 € 335 € 446 € Source: Heidelberg Estimate – March 2006, Industry statistics, PIRA, Jakkoo Pöyry, GAMIS *Base Year: 2004 (2. 5 bn €) 472 €

Print is alive and well Market Trends Intergraf GA / Helsinki 2007 …and growth in individual print products is strong Forecast Annual Growth Rate 2005 -2010 by Print Product Finland Denmark Nordic Germany USA World Magazines 2, 4% 1, 7% 1, 6% 1, 9% 1, 5% 2, 8% Advertising 2, 3% 1, 5% 1, 4% 1, 7% -0, 8% 2, 0% Catalogs 2, 3% 1, 7% 1, 8% 1, 6% -1, 6% 2, 2% Book Printing 2, 3% 1, 6% 1, 5% -2, 5% 2, 2% General Commercial 2, 4% 1, 6% 1, 5% 1, 7% 0, 4% 2, 0% Speciality 2, 2% 1, 5% 1, 7% 1, 2% 0, 4% 1, 7% Labels & Tags 3, 6% 2, 5% 2, 8% 3, 2% 2, 2% 4, 0% Folding Boxes 3, 0% 1, 9% 2, 2% 0, 7% 3, 1% Source: Heidelberg Estimate – March 2006, Industry statistics, PIRA, Jakkoo Pöyry, GAMIS *Base Year: 2004

Printers have to adapt Intergraf GA / Helsinki 2007 What to do ? Increase Productivity Differentiate Offerings Adapt Business Model

Printers have to adapt Increase Productivity Intergraf GA / Helsinki 2007 From islands of automation… Administration Prepress Postpress Workflow Integration

Printers have to adapt Increase Productivity Intergraf GA / Helsinki 2007 Workflow Integration … to workflow integration Print Buyer Integration Administration Job ticket Job Data Central JDF und core data for each machine and every work position Prepress Print Buyer Integration Prepress Integration Press Postpress Press Integration Postpress Integration Color Solutions Delivery/ Fulfillment

Printers have to adapt Increase Productivity Intergraf GA / Helsinki Workflow Integration 2007 Case Study 1: Direct savings of roughly 30% 3, 5 m€ 35 employees 12, 000 plates/year Efficient Order Preparation consistent data entered and reused in production systems (i. e. job ticket) Efficient Order Management less internal resources required per job Prepress reduction of staff due to level of automation Press Reduced Cash-Out or additional Cash. In Indirect Savings (additional capacity) 0 € 0 % 71. 000 € 2 % 0 € 0 % 61. 000 € 1. 7 % 636. 000 € 18. 1 % 0 € 0 % 285. 000 € 8. 1 % 0 € 0 % 175. 000 € 5. 0 % 7. 000 € 0, 2 % 1. 096. 000 € 31. 2 % 139. 000 € 3. 9 % reduction of 3 rd shift and material savings Job Costing less effort to gather data and charge services not charged in past Total

Printers have to adapt Differentiate Offerings Intergraf GA / Helsinki 2007 Print buyers are hungry for new effects Print Buyer Level of Interest in Embellishment Options „Everybody can print 4 c – but how can I differentiate myself from competitors? “ Coating Die-cutting/Window cutting Perforating Laser micro cutting Iriodin Laminating Embossing Higher grammages * Hexachrome Printing on plastic Fluorescent inks Scented inks Hot-foil stamping 1 Source: HDM Print Buyer Study, 2005 * > 300 g/m² uninteresting 2 3 4 5 very interesting

The sky is falling Local Indicators Intergraf GA / Helsinki 2007 As in most countries, the printing industry in Finland is composed of numerous small companies– typical next phase is consolidation! Printing Industry in Finland Leading 100 Printers by Revenue (2006) Source: Balance Consulting Oy, Ranking Report Printing Houses, January 2007

Printers have to adapt Intergraf GA / Helsinki Adapt Business Model 2007 Case Example „Tomorrow? “ Paper-based interfaces to the electronic world Beyond Ink on Paper