German printing press manufacturer Koenig and Bauer AG (KBA), whose core business is sheetfed and web offset presses, but which is also active in less economy-dependent markets such as packaging, security and digital printing as well as marking and coding, has released positive figures for the first half-year. A strong operational cash flow of €65.7m comfortably covered payments for investments. A growth in the free cash flow to €55.8m significantly improved liquidity. The double-digit increase in sales, the advantageous product mix and the savings delivered by a recently expanded cost-cutting programme resulted in a substantial improvement in earnings compared to 2011.
Drupa fills order books
At this year’s Drupa trade fair in May KBA unveiled a new digital inkjet press, developed and built at its main plant in Würzburg, which signals KBA’s entry into the growing digital print market. In the medium term this should help to offset, at least in part, a slump in web press sales. The first orders are expected in the second half of the year. Drupa helped swell the inflow of sheetfed orders in the second quarter to a high of €211.1m. Over the full six months sheetfed orders rose by 17.4% to €364m (2011: €310.1m). However, the lack of investment by web printers caused a drop in new orders for web and special presses to €215.3m, below last year’s extraordinarily high figure of €372.8m which had been boosted by some major contracts for special presses. In total the group order intake came to €579.3m, 15.2% less than the previous year’s record high of €682.9m.
KBA group sales rose by 15.9% to €590.5m (2011: €509.7m). In the web and special press division, deliveries of security, newspaper and commercial presses, plus coding and marking systems for various branches of industry contributed to a 38.2% leap in sales to €347.5m (2011: €251.5m). However, sales in the sheetfed offset division in the six months to July came to €243m, behind the target for 2012 and last year’s figure of €258.2m. The positive impact of Drupa will become more apparent in the second half of the year.
Notwithstanding the lower volume of orders for web presses, the group order backlog at 30 June came to €814.5m, a third higher than twelve months earlier (€614m). Booked orders for sheetfed presses rose by 25.8% and for web and special presses by 36.3%.
Profits buck industry trend
Compared to 2011, higher sales and a jump in the gross profit margin to 29% transformed a €7.3m operating loss into a €13.6m profit. Even though profitability was influenced by weak demand and continuing pricing pressures in classic newspaper and commercial sectors, operating profit in the web and special press division climbed to €31.7m (2011: €14.1m). Higher contribution margins delivered by brisker sales were a major factor, along with profitable service activities and a larger proportion of special presses. The operating result in the sheetfed division was affected by below-target sales, expenses for Drupa and high lead costs for new generations of presses. Notwithstanding the continuous pressure on margins, the savings delivered by cost-cutting initiatives reduced the division’s loss by €3.3m from €21.4m in 2011 to €18.1m. The management board recently expanded its turnaround programme for both aspects of its core business to include various ongoing measures to trim costs.