The half-year figures issued by the Koenig & Bauer group (KBA) reveal the volume of new orders jumped 34.7 per cent, to €731.6M (2003: €543.3M), boosted by the drupa fair in May. “Strong growth in the demand for sheet-fed and web presses alike indicates that the print media industry is finally emerging from the recession that has dogged it for the past three years,” the company states.
The rescheduling of shipments impacted on group sales, which at €534.9M were 6.7 per cent above the corresponding figure for the previous year, but below the target for 2004. As a result KBA posted a loss before taxes of €18.5M. Even so, and despite a high extraordinary expense for drupa, the pre-tax loss was one-third smaller than in 2003 (-€26.6M). With liquidity temporarily tied up in inventories, the cashflow from operating activities shrank to -€8.1M. However, a substantial increase in third and fourth quarter sales is expected to remedy this.
Since the level of plant utilization at the group’s web press facilities has improved significantly, there are no plans for further cuts beyond the closure of the Berlin operation at year’s end. However, according to KBA management, fierce competition in the web press market means that the number of non productive staff will have to be reduced by 80.
KBA’s short cycle sheet-fed offset booked an exceptionally large number of orders throughout the drupa season. The inflow of orders to 30 June 30 swelled 38.5 per cent, to €426.7M. The volume of new bookings for web presses rose by 29.6 per cent, to €304.9M, largely due to contracts for several newspaper presses and a revival in the demand for commercial web offset and publication rotogravure presses.
Due to the rescheduling of certain shipments, sheet-fed offset sales were just 7.7 per cent above the figure for last year (€271.3M), at €292.1M, but will increase substantially in the second half. Shipments of web presses rose 5.6 per cent to €242.8M.
Although domestic sales climbed 27 per cent, to €76.6M, a high export level of 85.7 per cent reflects persistently weak demand in the German market. In fact, for the first time, sales to Asia-Pacific markets overtook domestic sales: driven largely by strong growth in China they jumped to €110.8M and accounted for 20.7 per cent of the group total.
After two “challenging” years, the group order level climbed above the billion euro threshold to hit €1,053.6m. The backlog of unfilled orders for sheet-fed offset presses stood at €394.2, a 55.1 per cent improvement on the prior year. This is the highest level in KBA Radebeul’s history and guarantees production until the end of the year. The order backlog for web presses stood at €659.4M and will keep production running for the rest of the year, especially since some major contracts were not included in the half-year figures because details had not been clarified.
In its quarterly report, KBA management emphasized the unsatisfactory pricing levels in the global printing press market, which it is aiming to address “by driving innovation and by introducing more flexible working hours”. In addition to higher labour costs, German press manufacturers are also having to contend with rising prices for steel and energy, and the strong euro which is sapping competitiveness and impacting heavily on exports.
Despite this challenging market environment, KBA holds by its annual group sales target of around €1.4 billion – the highest in its history – and a pre-tax profit.
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