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KBA Profits from Strong Standing in Niche Markets

November 15, 2011
WÜRZBURG, GERMANY—Nov. 15, 2011—While the third quarter saw demand in the press engineering sector slow, German press vendor Koenig & Bauer AG (KBA) profited from a strong presence in niche markets such as security printing, metal decorating and industrial coding, where demand is robust. In the summer quarter, the group booked new orders worth €472.8m, the highest level since the record year of 2006. The order intake for the nine months to October was up 15.4 percent at €1,155.7 million (2010: €1,001.2m). The order backlog passed the €800 million mark for the first time since summer 2008, totalling €810.8m. However, revenue for the full nine months rose by just 1.8 percent to €785.7 million (2010: €772.1m).

Delayed shipments and substantial charges for further capacity cuts at KBA’s underutilised web press production plants led to a pre-tax loss of €15.6 million for the third quarter and €26.6 million for the full nine months (2010: –€6.7m). The group posted a net loss of €32.5 million (2010: –€9.2m), which corresponds to earnings per share of –€1.97 (2010: –€0.56).

Patchy performance in both business divisions With demand flagging, the total volume of incoming orders for sheetfed offset presses was just 2.2 percent higher at €472 million (2010: €462m). This contrasted with brisk business in niche products, which boosted the volume of new orders for web and special presses by 26.8 percent to €683.7 million (2010: €539.2m).

Sheetfed sales, however, climbed by 14.9 percent to €397.4 million (2010: €346m), whereas sales of web and special presses slid by 8.9 percent to €388.3 million (2010: €426.1m), largely due to shipping delays. But despite the loss of revenue, and the need for additional provisions to fund personnel adjustments, KBA’s web and special press division posted a modest profit for the nine months. In the sheetfed division, pricing pressures and the substantial upfront expense associated with developing new products for the Drupa trade fair next year outweighed the cost savings achieved, eliminating any operating profit.

Exports account for around 85 percent of group sales
A 28 percent jump in domestic sales trimmed the export level to 84.6 percent. The volume of group sales generated in the rest of Europe rose from 30.3 percent to 36.1 percent, and in North America from 9.7 percent to 10.4 percent. The figure for Asia and the Pacific remained high at 26.7 percent. Latin America and Africa accounted for 11.4 percent of total group sales, which is closer to their historical average than the prior year’s 21 percent.

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