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KBA Posts Profit for 2009, Targets Modest Sales Increase in 2010

March 26, 2010
WÜRZBURG, GERMANY—03/26/10—Following preliminary disclosures in early February, German press manufacturer Koenig & Bauer AG (KBA) has now published its financial statements for 2009. While the economic recession and the structural changes taking place in the print media industry have had a massive impact on press markets, compared to other players in the sector KBA’s performance was impressive. Despite a 31% plunge in sales, it was probably the only press manufacturer in the international premier league to post a profit in 2009 and adjust capacities to diminished market volumes without raising debt.

• €2.7m pre-tax profit and positive cash flow
• €100m-plus cost savings from realignment
• Modest increase in sales and income targeted in 2010

The rapid implementation of a radical consolidation and cost-cutting initiative enabled the group to transform an operating loss of €79.9 milion in 2008 into an operating profit of €8.7 million. This was no mean feat considering the persistent weak demand, price erosion and poor contribution margins prevailing in the sector.

Although KBA’s web and special press division suffered from a continued slide in demand, affecting plant utilisation levels at the group’s factories in Würzburg and Frankenthal, it generated an operating profit of €31.8m (2008: €108.5m), largely from security presses and service activities.

Sheetfed consolidation on target
KBA’s German and Czech production plants also ran at well below maximum capacity early in the year, and restructuring gains were not reflected in the bottom line until the second six months. As a result the sheetfed division posted an operating loss of €23.1m. However, this was much smaller than expected and substantially lower than the prior-year loss of €188.4m. A balanced result is targeted for 2010.

Solid finances and good liquidity
The KBA group posted a pre-tax profit of €2.7m (2008: €87.1m loss) and net profit after tax of €6.6m (2008: €101m loss). Earnings per share were thus 41 cents, against -€6.18 in 2008. But in view of persistent economic instability the management and supervisory boards will table a motion at the AGM to forego the payment of a dividend.

While prepayments fell, cash inflows from operating activities were relatively high (€29.6m against €34.6m in 2008) thanks to a reduction in working capital. The free cash flow improved from -€9.9m in 2008 to €4.9m. At the end of December liquid assets totalled €76.1m and bank loans €48.3m, resulting in net liquidity of €27.8m (2008: €22.6m). After eighteen months of recession these figures are well above the average for the engineering industry.
 

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