manroland web systems Inc.

Manroland Records High Level of Incoming Orders for the 2010 Financial Year

Amidst economic rebounds, manroland recorded clear gains in orders for the 2010 financial year. Incoming orders were up by 15 percent from the previous year, totaling 976 million euros. Sales, on the other hand, decreased to 942 million euros (compared to 1,112 million euros in the previous year), attributable to the low number of orders in 2009. Operating earnings (EBIT) of -66 million euros were achieved. Nevertheless, signs of a recovery were apparent by the fourth quarter and an operational turnaround could already be achieved within this period. For the 2011 fiscal year, a return to operational profitability is expected.

The continued increase in demand in the growth regions of China, India, and Latin America, as well as successful appearances at industry trade fairs, such as the IPEX in Birmingham (England) and Expoprint in São Paulo (Brazil), were major factors driving the positive order situation.

This positive development was not yet reflected in sales, which were at 942 million euros for the 2010 financial year and thus 15 percent below the 2009 level of 1,112 million euros. The export ratio increased to 80 percent, with a strong gain above all in the share for the emerging markets. Sales in the BRIC countries increased by 50 percent from the year before. The services business, primarily consisting of spare parts, maintenance concepts (printservices), and pressroom products (printcom), was further expanded. This business stands for continued growth.

"There was a clear upwards trend for incoming orders in 2010. Our business in China, Latin America, and Germany was particularly strong. Our product innovations in both sheetfed and webfed offset printing, as well as our range of services were given an especially warm welcome," said Gerd Finkbeiner, manroland's CEO. "We are assuming, however, that we will not be able to sustain incoming orders and sales at the levels we had prior to the economic crisis. We have undertaken major financial and operational efforts to adjust our capacities accordingly, and we expect a satisfactory utilization in the medium term."

Not including external personnel and trainees, as of December 31, 2010, manroland had a total staff of 7,147 worldwide, with approximately 84 percent in Germany. This represents a decrease of roughly 10 percent from the previous year. By the end of 2012, the number of employees is scheduled to be reduced to under 6,000.

manroland is expecting a continued economic recovery in the printing industry over the coming months. The company anticipates a moderate growth in sales for the current financial year 2011. The package of measures to ensure long-term independence, initiated in September 2010, is scheduled for implementation by mid 2012. The associated additional savings are estimated at 50 million euros annually, and will be fully realized from 2013 onwards. In the medium term, manroland expects sales levels to return to well over 1 billion euros a year. A return to operational profitability should be achieved in 2011.

On January 1, 2011, the new manroland Industrial Services business unit was established to provide the services of highly qualified personnel to customers. Drawing on the company's core competence – unparalleled technological expertise – manroland was able to once again expand its portfolio of services.

Since December, manroland has worked together with Océ Printing Systems GmbH, one of the leading international manufacturers of high performance printing systems for webfed digital printing, cooperating at the global level in the area of inkjet-based digital printing solutions for the graphic arts industry. This cooperation permits access to a promising growth market that is closely related to manroland's core expertise. manroland and Océ will appear together for the first time at digi:media in early April 2011.

Since August, manroland is marketing and distributing products from the Tensor Group from its own distribution and service network, and is thus able to provide low-cost solutions from a leading US manufacturer for single-width newspaper presses as well as strengthen its product range in high-growth markets. As part of this cooperation, a Brazilian printing company already bought the first system. manroland AG has sustained its position as world's market leader in web offset.

In the sheetfed sector, manroland has set new standards for sheetfed offset efficiency with the Roland 900, XXL Perfector in format 8. manroland equipped the new XXL perfecting press with a number of performance characteristics unknown in large-format perfecting up to now. The press is geared especially toward service providers in the areas of commercial, advertising, and publication printing.

Moreover, with the development of the high performance Roland 700 HiPrint HS sheetfed press, manroland optimized its product range for larger runs in the areas of packaging and high-volume commercial printing: this press allows customers to increase their productivity by up to 25 percent with runs of 18,000 sheets per hour.

In the webfed sector, manroland's engineers have entered new dimensions with the 96-page Lithoman S in long grain with a web width of 2,860 mm. This will once again enable new levels of productivity and competitiveness in high-volume commercial printing. With this investment, a printing company advances to print-run volumes that until now were reserved for gravure printing. The first three presses will be manufactured respectively delivered in the current year.

The trade fair appearances at the IPEX and Expoprint in the first half of 2010 were very positive, and manroland's products were greeted with strong interest by visitors. Sales of nearly 250 printing couples at the IPEX, with over 100 printing units as well as six systems for newspaper and magazine printing shipped to Brazil, attest to this fact. Moreover, the new bold trade fair concept for the IPEX received a strong response: manroland was once again able to live up to its claim of being a groundbreaking provider with an excellent customer orientation.

Due to the importance of growth markets for manroland's business, the company decided to take over control of the sales and service networks in South America, southern Africa, Southeast Asia, Australia and New Zealand. This market organization, developed in-house in 2009, was able to achieve great success in 2010. In Brazil, for example, all well-known high-circulation newspapers are now printed on manroland presses.

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