Press manufacturing giant KBA returned to profit in 2004 turning round a €46m loss in 2003 to a €20m profit in 2004, and predicts even higher earnings for the current year. In 2004, which was a drupa year, the company achieved record sales levels, with sales up by 15.5 per cent over the previous year to €1.42bn, while new orders rose even more, up by 16.2 per cent, resulting in an EBIT of €20.3m following the prior-year loss of €46m.
President and CEO Albrecht Bolza-Schünemann delivered the figures at a press conference at what is now the biggest engineering complex in east Germany, KBA’s sheetfed production plant in Radebeul, near Dresden.
According to the president a technology upgrade across its entire product spectrum was instrumental in enabling KBA’s Radebeul sheetfed offset facility to post strong growth in sales and new orders.
Group sales climbed to hit a record high of €1,423m (2003: €1,231.8m). Sheetfed offset sales jumped 16 per cent to €716.2m (2003: €617.5m) accounting for half the total, while sales of web and special presses improved by 15.1 per cent to €706.8m (2003: €614.3m). The volume of new orders swelled by 16.2 per cent to €1,459.1m (2003: €1,255.8m).
New orders for the sheetfed offset division, which for the first time included a specialist manufacturer of metal-decorating presses, Bauer+Kunzi in Ditzingen (near Stuttgart), posted a 14.7 per cent improvement to €756.4m (2003: €659.7m), while the web and special press division, which also welcomed a new addition, KBA-Metronic, ramped up bookings by 17.9 per cent to €702.7m (2003: €596.1m). Despite a larger volume of shipments the group order backlog at year’s end stood at €893m (2003: €856.9m).
Although demand has picked up and production plants are running at a higher level of capacity, Bolza-Schünemann reported that pricing pressures in the global press market show no sign of easing. Since exports account for a the vast majority of group output (85.9 per cent in 2004, 87.4 per cent in 2003), earnings were hit by the strength of the euro, along with a big rise in steel and energy prices. Together, these external factors partially offset internal cost savings gained from the closure of assembly plants in Kusel and Berlin (KBA-Berlin GmbH) and staff layoffs at the group’s main web press production plants in Würzburg and Frankenthal. Nonetheless, KBA achieved a relatively rapid return to profit following a high prior-year loss exacerbated by restructuring expenses.
In 2003 Koenig & Bauer AG was unable to pay a dividend for the first time since going public in 1985. At the AGM in Würzburg on June 23 the management and supervisory boards will propose resuming payment with a dividend of 25 cents per share on a total of more than 16.2 million no-par shares. Of the company’s net profit of €5.1m, some €4.1m will be returned to shareholders and €1m reinvested.
Following a big loss in the web and special web division in 2003, which wiped out profits from sheetfed offset operations, both divisions posted a pre-tax surplus in 2004. However, unsatisfactory market pricing, coupled with expenses relating to the Drupa trade fair and an upgrade of virtually the entire product range, shrank the sheetfed operating profit to €9.8m, well below the prior-year figure of €19.9m. By contrast, the web and special press division moved from a loss of €66.9m (including restructuring expenses) in 2003 to an operating profit of €10.5m, with a newly consolidated subsidiary, KBA-Metronic AG, making a sizeable contribution.
For 2005 the company predicts the new compact, waterless KBA Cortina will make a sizeable contribution to newspaper press sales in 2005.
While expressing dissatisfaction with the level of earnings, and emphasising the group’s aim of achieving a sustained improvement, Bolza-Schünemann pointed out that the group balance sheet was well able to stand comparison with that of other industry players.
KBA expanded into new, high-growth applications by buying up two thriving manufacturers of metal-decorating presses (Bauer+Kunzi) and presses for printing data storage media and smart cards (KBA-Metronic). On March 10 the group stepped up its presence in the small-format sheetfed offset market with the acquisition of Czech press manufacturer Grafitec. Future acquisition will be in keeping with the group’s core competence of press engineering.
The consolidation of the new Czech subsidiary, now named KBA-Grafitec, will raise the total KBA employees by some 400 to around 7,800.
Following an above-average performance in 2004, KBA anticipates much higher earnings in 2005, but no more than moderate growth in group sales. The main reasons for such a sober projection are uncertainties relating to the economy, currency exchange and the cost of raw materials; volatility in key sectors of the print industry (particularly newspapers); and the absence of a stimulus comparable to the drupa trade fair. And now that plant utilisation has risen, the group aims to focus on earnings rather than on growing market share at any price.
The first two months of the current year brought a brisk demand for sheetfed offset presses and a larger volume of new orders for web presses than at the same time the previous year. This positive trend continued in March. However, in view of the many unpredictable external factors involved, KBA management will not be issuing a detailed group prognosis until a later date.
