Ad Hoc 2009
Koenig & Bauer AG: quarterly profit in a challenging year
While demand in the export-intensive press engineering sector has stabilised at a low level since the summer, German manufacturer Koenig & Bauer AG (KBA) sees no sign as yet of a sustained recovery. The Group order intake for the first nine months was €682.3m, 32.1% below the Drupa-enhanced figure of €1,005m for the same period the previous year. However, this was better than the plunge of 49% in the industry as a whole. After picking up strongly in April and remaining buoyant in the summer, orders for sheetfed presses came to €149.4m in the third quarter, up from €145m in the second. The total for the first nine months was €371.7m, 24% below the prior-year figure of €489.3m. The volume of new orders for web and special presses fell from €515.7m to €310.6m, a difference of 39.8%. The only bright spot was security printing.
Group sales were on schedule at €737.3m (2008: €1,075.3m). An increase in sheetfed sales in the third quarter raised the figure to €318.8m at the end of September (2008: €499.9m). Sales of web and special presses fell from €575.4m to €418.5m. A group order backlog of €446.5m on 30 September compared to €721.6m a year earlier. Web and special presses contributed €287.3m (2008: €510.2m), sheetfed €159.2m (2008: €211.4m).
The cost-cutting initiatives launched in March delivered savings of more than €80m by the end of September. A vigorous consolidation programme has cut the group payroll by 908 to 7,095. At the end of the fourth quarter KBA will have fewer than 7,000 and by mid-2010 just under 6,500 employees.
Following pre-tax losses of €35.2m in the first quarter and €12.2m in the second, in the third quarter the KBA group posted a pre-tax profit for the first time this year of €9.6m. For the nine months to October KBA made an operating loss of €31.1m (2008: €7.9m profit), a pre-tax loss (EBT) of €37.8m (2008: €3.6m profit), and after deducting income taxes disclosed a group loss of €39m (2008: a profit of €7.8m). Earnings per share were also negative (–€2.38 compared to +47 cents in 2008). Cash flows from operating activities were positive at €9.5m (2008: €49.8m), largely due to a substantial decrease in working capital.
In his outlook KBA president and CEO Helge Hansen states that because of an unexpectedly weak inflow of orders for multi-unit web presses group sales are unlikely to exceed the €1.1bn mark in 2009. Despite market conditions make provisions necessary in the final quarter for a capacity reduction in the web segment that is much bigger than originally planned, we stand by our objective of posting a balanced group result (EBT) by the end of the year. “If thefourth quarter proves disappointing and we post a negative result for the full year, it will be in the low single-digit million euro range and would still represent a notable achievement compared to the performance of other players in the sector.”
18.06.2009 - 14:49 Uhr
Ad hoc: Koenig & Bauer AG: Vorstandsvorsitzender Hansen sieht KBA trotz Investitionsflaute auf Kurs
In der am 18.06.2009 um 11:15 Uhr veröffentlichten Adhoc-Meldung mit dem Titel "Koenig & Bauer AG: Vorstandsvorsitzender Hansen sieht KBA trotz Investitionsflaute auf Kurs" war leider die Datumsangabe bei folgendem Satz falsch: Richtig muss es heißen: "Eine Bundesbürgschaft haben wir für den Zeitraum ab April 2010 beantragt."
Koenig & Bauer AG: CEO Hansen: KBA on course despite soft demand
Since April German press manufacturer Koenig & Bauer (KBA) has seen a major upturn in new orders for sheetfed presses, with business drummed up at trade fairs in the Middle and Far East largely balancing a shortfall in the first quarter. This was the message delivered by Helge Hansen, KBA president and CEO since 27 March, at the company’s 84th AGM at the Vogel Convention Center in Würzburg. However, as Hansen warned the serried ranks of shareholders present, demand for big newspaper and commercial web presses remains unsatisfactory. “While we have increased our share of the global newspaper market to almost 50 per cent, the total volume of new orders booked in the first five months was well below our target for the year. The global recession and financial meltdown continue to impact on demand in the sector, and are now affecting sales of special presses for niche applications. At present the only bright spot in this gloom is the security printing sector.”
He continued: “Since the financial crisis broke, customer financing has become increasingly difficult and changes in banks’ lending practices have in many cases put paid to planned investments. Even so, the past few months have shown that KBA’s product range, which is much broader than that of the market leader and embraces customised multi-unit web presses, batch-produced and special sheetfed presses, exerts a stabilising influence on sales.”
Referring to recent media reports of state aid for press manufacturers, Hansen warned against generalisations based on isolated cases, and argued for a more differentiated assessment of individual enterprises. He followed this up by emphasising the KBA group’s solid financial and liquidity base compared to certain rivals: “At present we have no net bank debts. On the contrary, in recent months we have improved our net financial position to a good EUR36 million and our operative cash flow is positive. At the end of March our equity ratio stood at 33.9%, well above the norm for the engineering sector. In addition to EUR100 million in funds we have a credit line of EUR160 million, of which more than 60% is guarantee credit required to safeguard the customer down payments that are routine in the heavy plant industry. We have applied for a government guarantee effective from 1 April 2010. As you are aware, at present such guarantees reflect changes in banks’ risk policies rather than in KBA’s liquidity.”
KBA is a solid, solvent enterprise and has no need of the “state prop” somewhat prematurely assigned it by a certain business journal. However, as Hansen explained, “we are concerned about possible competitive imbalances that may be caused by government intervention.”
KBA will continue to expand its service activities, and is also aiming to expand its consumables business. As it has done for the past 192 years, the group will remain an innovative and trusted provider for print entrepreneurs the world over. But like many other industry insiders, once this crisis has passed the KBA management board does not see the global market volume for press technology returning to the high levels of 2005 or 2006 for the foreseeable future. Growth is being limited by changes in media consumption habits, ongoing consolidation in the print sector, a rapid increase in press productivity and the emergence of low-budget rivals in threshold economies like China and India.
Last year, amid financial and economic turbulence, KBA posted group sales of EUR1.53bn, a good EUR200m below the record EUR1.74bn for 2006, and this year the figure will shrink by over EUR300m to just under EUR1.2bn. Helge Hansen comments: “We and the other press manufacturers cannot stop the market from shrinking, so to achieve a decent return again as soon as possible we must adjust our capacity accordingly.”
Hansen goes on: “To achieve the growth KBA undoubtedly requires in the medium term, we must look to high-potential sectors where we can capitalise on our formidable skills in engineering, high-quality machine manufacture and global distribution. Two of the sectors we are focussing on are packaging and green energy technology, and here we have already developed specific concepts. Alongside a more customary merger or acquisition we are considering taking a stake in a promising new start-up or entering an alliance with an established player as a means of gaining access to these markets. Our solid balance sheet and finances certainly give us plenty of scope.”
According to the preliminary figures quoted by Hansen, in the first five months of the year the KBA group posted a 20.7% decline in new orders (1st quarter: 40.7% decline). However, the revival in sheetfed business swelled the order backlog at the end of May to EUR557.1m (1st quarter: EUR500.8m). Group sales, at EUR347.5m, were 34.7% down on the corresponding figure for the previous year and 10.7% below target. Meeting the group target for 2009 of around EUR1.2bn will depend largely on market trends in coming months. Said Hansen: “Following last year’s substantial loss we have a real chance of achieving our ambitious goal of posting a balanced result, even if sales are just shy of EUR1.2 billion.”
In view of the net loss posted by the parent, Koenig & Bauer, no dividend will be paid for 2008.
Koenig & Bauer AG: Cost savings will boost results in subsequent quarters
Following slack demand in the final quarter of 2008, the first quarter brought little relief to the printing press sector. The group order intake for Koenig & Bauer AG (KBA) totalled EUR219.5m, a drop of 40.7% from the prior-year figure of EUR370.3m. However, this was better than the industry average, largely thanks to KBA’s broad product range addressing both volume and niche markets. While orders for web and special presses were down 28.7% at EUR142.2m (2008: EUR199.3m), the knock-on effects of the financial and economic crisis caused demand for sheetfed presses to shrink by more than half to EUR77.3m (2008: EUR171m). The impact on sales, which declined by 27% to EUR220.2m (2008: EUR301.7m), was equally disparate. A relatively moderate drop of 9.1% to EUR143.4m (2008: EUR157.7m) in the web and special press division, where production cycles tend to be much longer, contrasted with a plunge of 46.7% to EUR76.8m (2008: EUR144m) in the sheetfed division. The group order backlog of EUR500.8m at the end of the quarter was roughly the same as at the beginning, but was 41.8% below the corresponding figure for the previous year of EUR860.5m. Web and special presses accounted for almost four-fifths of unfilled orders.
The savings in personnel expenses delivered by short-time work at all KBA’s production plants failed to offset the revenue lost through slower sales. Management anticipates a substantial reduction in personnel and material costs in coming months following the implementation of the scheduled capacity adjustments, for which ample provision was made last year. These entail extensive job cuts at the sheetfed factories. A first-quarter operating loss of EUR32.7m (2008: EUR–5m) and pre-tax loss of EUR35.2m (2008: EUR–6.4m) were in line with expectations. The net loss came to EUR33.2m (2008: EUR–1m), resulting in earnings per share of EUR–2.03 (2008: –6 cents).
Cash flows from operating activities were positive, totalling EUR19.2m (2008: EUR88.6m). This was largely due to a substantial drop in trade receivables. The free cash flow came to EUR13.5m (2008: EUR73.7m). Liquid assets swelled from EUR85.8m at the end of December to EUR99.4m at the end of March, and the net financial position improved from EUR22.6m to EUR36.6m over the same period. Despite the quarterly loss, the equity ratio of 33.9% was higher than the industry average. At the end of March there were 7,646 employees on the group payroll, 535 fewer than twelve months earlier and 192 fewer than at the beginning of the quarter.
KBA president and CEO Helge Hansen says: “In the current market environment, our March prediction of a 20% decline in sales is fairly optimistic, as is the balanced pre-tax result we are targeting. We shall therefore continue to devote all our energies to pursuing these goals. We are currently in the process of adjusting capacities to a smaller market volume, and this will materially improve our profitability by the end of the year. The total package aims for savings of several hundred million euros in personnel and material costs by 2011. We’ll keep you posted on progress in our interim reports.”
Koenig & Bauer AG: High restructuring charge impacts on earnings
German press manufacturer Koenig & Bauer AG (KBA) published its 2008 financial statements on 30 April following preliminary disclosures on 26 March.
The global economic downturn had a disproportionately severe impact on the inflow of orders for batch-produced sheetfed presses, which plunged 22.6% to EUR598.5m (2007: EUR773.5m). The web and special press division, where multi-unit installations with lengthy production times dominate the schedule, exerted a stabilising influence, with new orders totalling EUR643m (16.9% below the prior-year figure of EUR773.4m). Group orders therefore shrank 19.7% to EUR1,241.5m (2007: EUR1,546.9m). Weak demand resulted in a 16.7% drop in sheetfed sales to EUR714.2m (2007: EUR856.9m), and their contribution to group sales consequently fell from 50.3% to 46.6%. With sales of web and special presses relatively steady at EUR817.7m (2007: EUR846.8m), group sales sank 10.1% to EUR1,531.9m (2007: EUR1,703.7m). The drop in the volume of orders on hand was much greater, from EUR791.9m to just EUR501.5m at year’s end.
The impact on profits of a EUR170m slide in sales was exacerbated by provisions and write-downs totalling EUR93.3m, primarily relating to the approved restructuring and consolidation of sheetfed facilities. This gave rise to an operating loss of EUR79.9m, as opposed to an operating profit of EUR65.7m in 2007.
A higher service turnover and solid earnings in niche markets less affected by the recession pushed up the profit generated by the web and special press division from a healthy EUR63.1m in 2007 to EUR108.5m. This contrasted with a heavy loss of EUR188.4m (2007: EUR2.6m profit) in the sheetfed division due to capacity underutilisation and substantial one-off expenses in preparation for the proposed realignment. The outcome was a financial loss of EUR7.2m, pre-tax earnings of EUR–87.1m (2007: EUR63.2m profit) and a group loss of EUR101m (2007: EUR49m profit). Net earnings per share came to EUR–6.18 (2007: EUR3.00). At the AGM on 18 June the management and supervisory boards will therefore table a motion to dispense with a dividend.
Cash flows from operating activities swelled from EUR21.3m to EUR34.6m, primarily due to higher provisions and a reduction in receivables and inventories. The KBA group’s cash flow is materially influenced by the customer prepayments commonly made in the heavy plant sector, which despite softer sales in the second half-year came to EUR140.5m (2007: EUR199.3m). The free cash flow improved from EUR–17.1m in 2007 to EUR–9.9m. At the end of December liquid assets stood at EUR85.8m (31.12.2007: EUR123.2m). With bank loans down EUR20.3m at EUR63.2m, the group’s net financial position remained strong at EUR22.6m. Additional credit lines totalling EUR160m have been extended by domestic banks. Although the net loss reduced total equity from EUR515.1m to EUR411.1m, an equity ratio of 34.8% (2007: 37.7%) reveals a solid capital base.
In view of weak global demand, unfavourable economic indicators in the ad-dependent printing industry and a drop of more than 36% in the group order backlog, KBA expects sales to be some 20% lower than in 2008. Management is hopeful that the timely implementation of the restructuring measures, which will mainly focus on sheetfed activities, will rapidly bring capacities and costs in line with the smaller global market anticipated in the medium term. The group payroll will be reduced to around 7,000 by the end of the year.
Since provision was made in last year’s accounts for the necessary personnel cuts, write-downs and other remedial action, KBA is targeting a balanced pre-tax result (EBT) for 2009, provided global demand does not deteriorate any further.
Preliminary financial figures for 2008 and changes at the top
The global economic crisis has left its mark on the 2008 balance sheet of Germany press manufacturer Koenig & Bauer AG (KBA). Preliminary figures reveal that the group order intake fell to EUR1,241.5m, 19.7% down on the corresponding figure for 2007. Below-capacity production levels, particularly at KBA’s sheetfed plants, caused a 10.1% drop in sales to EUR1,531.9m (2007: EUR1,703.7m). The volume of orders on hand at the end of the year shrank 36.7% to EUR501.5m. In consequence the group posted an operating loss of around EUR80m and a pre-tax loss (EBT) of more than EUR85m. However, there was a modest EBITDA profit of under EUR10m.
An operating profit of more than EUR100m on web and special presses contrasted with a loss of over EUR180m in the sheetfed division, where substantial provisions for the proposed restructuring of domestic and foreign sheetfed production plants and for related inventory valuation adjustments, write-downs on bad debts and other remedial measures resulted in a one-off charge in the high double-digit millions.
Company president and CEO of six years’ standing Albrecht Bolza-Schünemann (57) has resigned with immediate effect from all offices within the group. Announcing his decision at the March meeting of the company’s supervisory board, he cited the substantial losses incurred by the sheetfed division in Radebeul near Dresden last year. His brother Claus (53) is now the sole remaining representative of the founding family on the KBA board.
Mr Bolza-Schünemann is making way for personnel changes aimed at turning the division around. The supervisory board accepted his resignation with the greatest respect and appointed Helge Hansen, CFO since February this year, his successor both as president and as head of human resources in Radebeul. Product development has been taken over by the executive vice-president for production, Dr Frank Junker.
At the end of December there were 7,838 employees on the group payroll, 398 fewer than in 2007 (8,236). Further reductions will be necessary at KBA’s sheetfed production plants, bringing the total down to nearer 7,000 by the end of the current year.
Given the present recessionary tendencies in the global economy and the engineering industry, KBA anticipates a further drop of 20% in sales. However, barring a renewed slump in demand the scheduled restructuring, consolidation and cost-cutting initiatives should enable the group to post a balanced result for 2009. A more detailed projection will be issued when the 2008 financial statements are disclosed on April 30.
President and CEO Albrecht Bolza-Schünemann hands finances to Helge Hansen
KBA squares up to the challenges of the financial crisis
With the approval of the supervisory board, on 6 February 2009 Albrecht Bolza-Schünemann (56), president and CEO of German press manufacturer Koenig & Bauer AG (KBA), will hand his financial remit to Helge Hansen (61), a respected banker and business economist. Hansen, who was appointed managing director of Metronic AG (now KBA-Metronic) in July 2003, successfully restructured the company following its acquisition by KBA in 2004.
Along with the rest of the press engineering industry and most exporters, KBA has experienced a collapse in sales over the past year in the wake of the global financial and economic meltdown. The appointment of a new executive vice-president for finances (CFO) to this SDAX-listed company – the world’s first and oldest press manufacturer – is a response to the mounting challenges posed by risk management, financial dealings with banks, and customer financing.
When Bolza-Schünemann was appointed president and CEO of KBA in June 2003, finances were added to his existing responsibilities of product development and human resources at KBA’s sheetfed operation in Radebeul, near Dresden. The transfer of his financial remit will give him more time to focus on the long-term strategic realignment of the entire KBA group in the international marketplace. This will entail a consolidation of the sheetfed division, which has been particularly hard hit by the global crisis.
Helge Hansen, KBA’s new CFO, is well qualified for his new position, having spent his entire career in finance. After taking his school-leaving certificate Hansen completed an apprenticeship at Commerzbank in his home city of Hamburg. In 1971 he graduated from the University of Hamburg with a degree in business economics. There followed a year expanding his knowledge of international finance on secondment to law firms in London. On his return to Commerzbank Hansen handled export financing as head of department from 1972 to 1980. In 1980 he moved into industry, gaining valuable experience as director of finances and accounting at the Salzgitter group and as managing director of two affiliated companies. From 1988 to 1999 he headed the Feinfocus group, a mid-cap start-up with a number of domestic and foreign plants producing non-destructive radiography testing equipment. Hansen first came into contact with KBA in June 2003, when he was appointed managing director of what was later to become KBA-Metronic. Prior to that, at the request of the lending banks he had successfully turned around a number of stricken businesses in the print media, construction and service sectors.