After six months earnings of the Koenig & Bauer Group (KBA) were up significantly on the first quarter and 2013. Following a 3.1% rise in group sales to €517.8m year-on-year, group pre-tax earnings (EBT) were almost balanced after the first half-year at –€0.1m due to a pre-tax profit of €12m in the second quarter of 2014. The world’s second-largest press manufacturer still posted EBT of –€12.1m after the first three months, and a pre-tax loss of –€8.8m in 2013. The management board stated previous initiatives and the higher-margin product mix as reasons for this considerable improvement in earnings.
KBA president and CEO Claus Bolza-Schünemann expects the first cost reductions resulting from Fit@All already in the second half of the year. This programme for group realignment to a shrunken and fundamentally changed press market has been in place since the beginning of 2014. He refers to the strain placed on the manufacturing sector and KBA’s important export business by the unforeseeable impacts of the crisis in the Ukraine, sanctions against Russia and other conflicts. Nevertheless, he stands by his goal published in spring of group sales of €1bn to €1.1bn, assuming that no major turmoil occurs. The management board also expects the significant improvement to earnings compared to 2013 to continue in the second half of this year.
According to recent statistics issued by the VDMA (German Machinery and Plant Manufacturer’s Association) orders for printing presses in the second quarter were down 16.2% on the previous year given weak growth and currencies in important threshold countries, and the unstable political environment. KBA bucked this trend thanks to its broad product spectrum with a 2.6% increase in group order intake to €456m. The total volume of incoming orders in the web and special press segment rose by 10.7% to €166.9m. This was triggered by more orders for banknote presses and coding technology, the new subsidiaries KBA-Flexotecnica and KBA-Kammann active in the special packaging sector and expansion of the service business. At €289.1m new orders for sheetfed offset presses were 1.6% lower than the prior-year figure owing to the reasons mentioned above.
Sales up again in Europe
A 13% decrease in domestic sales year-on-year pushed the export level to 83.4% (2013: 80.3%). Deliveries to Europe (not including Germany) rose from €129.8m the year before to €209.4m. This historic KBA core market gained ground again with 40.4% of group sales compared to 2013 (25.8%). Sales attributable to the growth region Asia and the Pacific increased slightly from €122.5m to €125.7m, with this region’s contribution remaining more or less stable at 24.3%. In North America the slump in business with newspaper presses led to a decline in sales to €52m, or 12.6% to 10% of the total. Revenue in Africa and Latin America came to €44.7m and 8.7% of group sales.
Market-orientated group realignment on schedule
The implementation of Fit@All has been a top priority since the beginning of this year. In recent months the company has made good progress with the planned reduction in capacity of 1,100 to 1,500 staff at production sites in Germany and abroad as well as with the bundling of similar production islands at just one site. Cancellation agreements and phased retirement schemes, or collective wage agreements and social compensation plans were agreed with over 700 employees. At the end of June 2014 the number of employees on group payroll stood at 6,110 compared to 6,158 twelve months earlier. Excluding the newly consolidated subsidiaries KBA-Kammann and KBA-Flexotecnica, and not including apprentices, trainees, temporary employees and staff on phased retirement schemes, the total fell by 242 to 5,189. It will fall to well below 5,000 by the end of the year. Many of the employees listed on group payroll have already left the company.
