by: Press Release | KBA
Brisk business in Asia and revived demand
from printers in domestic, European and Latin American markets brought
orders worth a sizeable €682.9m for German press manufacturer Koenig
& Bauer AG (KBA) in the six months to the end of June. Even though a
number of major contracts for web and special presses were not signed
until July the total surpassed the prior-year figure of €679.3m, which
had been boosted by the Ipex international trade fair. There was an
increase of 7.7% in sales to €509.7m (2010: €473.2m), and of 13.5% in
the order backlog to €614m. KBA’s performance was thus above the median
trend for the sector.
Firmer sales and the cost savings delivered
by the consolidation programme initiated in 2009 shrank the operating
loss from €18.9m to €7.3m. The group halved its pre-tax loss to €11m. A
group net loss of €14.7m (2010: –€20.3m) corresponds to earnings per
share of –€0.89.
Results in the second quarter were impaired
by a less profitable sales structure, pay rises, a strike at KBA’s
Frankenthal plant and the substantial up-front expense associated with
developing new products for launching at the Drupa 2012 trade fair.
Management expects a big improvement in the second half-year.
Strong finances and balance
Although inventories swelled in preparation
for a larger volume of shipments, cash flows from operating activities
jumped to €32.3m from –€18.1m twelve months earlier. This was sufficient
to cover cash flows for investing activities and raise the free cash
flow to €15.4m. Alongside ample credit lines KBA had funds totalling
€104.8m at the end of June. After deducting bank loans, which fell to
€40.2m, net liquidity was an impressive €64.6m and the equity ratio an
above-average 39.1%.
29.6% leap in sheetfed sales
At €168.6m the volume of new orders booked
for sheetfed offset presses between 1 April and 30 June was
substantially larger than in the three preceding quarters. The volume of
incoming orders for the full six months was up 2.1% at €310.1m (2010:
€303.6m). New orders for web and special presses amounted to €372.8m and
thus fell short of the prior-year figure of €375.7m. This was because
some major contracts from newspaper, commercial and security printers
did not appear in the books until July. A 29.6% leap in sheetfed offset
sales to €258.2m contrasted with an 8.2% drop in sales of web and
special presses to €251.5m, which was largely attributable to shipments
being delayed by prolonged industrial action at KBA’s Frankenthal plant.
The backlog of unfilled orders for sheetfed offset presses at the end
of June was 9.2% larger and for web and special presses 15.9% larger
than twelve months earlier.
Business picks up in rest of Europe
The export level eased down to 85.3%
following a 15% climb in domestic sales. 37.1% of group shipments went
to the rest of Europe (2010: 29.5%). But while this was an increase on
the previous year it was well below the historical average, due to the
ongoing economic difficulties in southern Europe, the UK and elsewhere.
Bolstered by a high volume of shipments to China, sales to Asia and the
Pacific accounted for 28.4% of the group total, up from 27%. In North
America, slack demand for web presses reduced the proportion of group
sales generated there from 11.6% to 8.3%. 11.5% of KBA’s sales were
booked in Latin America and Africa.
Capacity cuts agreed at web press plants
At the end of June there were 6,371
employees on the group payroll. This was just 74 fewer than twelve
months before because additional subsidiaries were consolidated in the
group accounts early this year. Capacity adjustments necessitated by
diminished market prospects were negotiated with employee
representatives and the IG Metall trade union for KBA’s web press
production plants in Frankenthal, Würzburg and Trennfeld. This will
result in the loss of over 500 jobs. In the medium term the group
workforce will fall below 6,000.
Prognosis for 2011 confirmed
In the half-year report KBA president and
CEO Helge Hansen stated that the group’s realignment to market realities
is well advanced. Although there are still a number of tasks
outstanding, and the economic environment has become less stable,
management stands by its targets for the current year of a single-digit
increase in group sales and a modest lift in pre-tax profits compared to
2009 and 2010. This is provided, however, that the existing turbulence
in financial markets does not impact on the global economy and
investment in the print media sector more severely than anticipated,
based on current knowledge.
In addition to the ongoing personnel
adjustments at its web press plants KBA is splitting its Frankenthal
facility into two independent companies which will be open to external
investors and customers. Along with a new digital business line the main
plant in Würzburg will take over some responsibilities relating to
sheetfed offset and special presses from the group’s Austrian
subsidiary, KBA-Mödling, which is operating at the limits of its
capacity.
The financial statements can be downloaded as a PDF file from
here.
