KBA on Target with Nine Month Figures; Third Quarter Report for Koenig & Bauer AG

Notwithstanding the current economic slowdown, president and CEO of Koenig & Bauer AG (KBA) disclosed in the third quarter report generally positive figures for the world’s second-largest press manufacturer. In his letter to the shareholders Claus Bolza-Schünemann says: “We are on target as far as the whole year is concerned.” For the first three quarters KBA released an increase in group sales to €916.2m, 16.6% up on the previous year. Beside its core sheetfed and web offset press business, the company is also active in less economy-dependent markets such as packaging, security, digital printing as well as marking and coding. Even though sheetfed orders were up 10% on 2011 thanks to the tradeshow Drupa, order intake of €826m failed to achieve last year’s record high of €1,155.7m boosted by several major orders for special presses. At €735.5m order backlog at the end of September saw a €171m increase on the corresponding figure for 2010, but failed to meet last year’s figure by €75m (2011: €810.8m).

Substantial increase in earnings

Following a loss of €20.4m the previous year, operating profit stands currently at €20.5m, an improvement of over €40m. Pre-tax earnings (EBT) soared to €12.5m compared to the half-year figure of €7.9m and also the prior-year loss of €26.6m. After tax, the group posted a net profit of €5.9m, which corresponds to earnings per share of €0.36.

Sheetfed orders up thanks to Drupa

In the meantime KBA is also feeling the effects of the economy-related weak demand in key markets that affect the entire engineering industry. Thanks to the industry’s leading trade fair Drupa in May sheetfed order intake after nine months at €517.8m exceeded last year’s figure by nearly 10%. Sales of sheetfed presses came to €395.4m, close to the figure in 2011. The positive effect of Drupa on sales will be more noticeable in the fourth quarter. High development and launch costs for new press generations in all formats, continuing pricing pressures and below-target sales caused the sheetfed division to post a loss of €21.4m.

Higher web and special press sales

At €308.2m the volume of orders for web and special presses was about 55% below last year’s extraordinary high of €683.7m which was boosted by a number of major orders. Web press orders for newspaper and commercial printing were hit by the growing importance of online media which enforced economy-related reluctance to invest. By contrast, in this long-term orientated business segment sales rose by 34.1% to €520.8m driven by numerous deliveries resulting from an earlier wave of orders. Higher contribution margins, the growth in the service business and an advantageous product mix resulted in the web and special press division showing an improved profit of €41.9m (2011: €1.7m).

Export level approaches 90%

A slide in domestic sales compared to 2011 raised the export level to 89.5%. In the first nine months sales to the rest of Europe contributed to only 29.7% of the group total (2011: 36.1%) dampened by the weak economy in the South and other parts of Europe. The volume of group sales attributable to the growth regions Asia and the Pacific was 24.4%, with China playing a major role. The figure for the emerging markets Latin America and Africa soared to an above-average 25.3% (2011: 11.4%). In contrast, sales in North America contributed 10.1% to the total, remaining below the long-term average.

Continued solid finances and balance sheet