KBA FInancials Include Jump in Order Backlog
Rising costs and investment impact on operating result
The rising cost of raw materials, heavy investment in new products, wage increases, unscheduled structural expenses and lower sales following external delays in deliveries until the current year reduced the group operating profit from €22.2 million in 2010 to €9.9 million. But despite unsatisfactory market pricing and fluctuating levels of plant utilization, KBA’s web and special press division posted a profit of €28 million (2010: €14 million), with niche and service activities playing a major role.
In the sheetfed division, price erosion and the high up-front expense associated with developing new products put paid to any operating profit, even though restructuring measures delivered substantial cost savings. The division therefore made an operating loss of €18.1 million following a profit of €8.2 million the year before.
Pre- and post-tax profit
A group pre-tax profit of €3.3 million and annual net income of €0.4 million fell well short of the corresponding figures for the previous year of €15.3 million and €12.5 million. In view of this unsatisfactory performance, and the current challenging business environment, the management and supervisory boards plan to dispense with a dividend for 2011.
Solid finances and a strong cash flow
Despite bigger inventories, cash flows from operating activities surged to €83.9 million (2010: €30.1 million) following a jump in customer prepayments and a drop in trade receivables. This covered higher outflows for investing activities and boosted the free cash flow to €57.8 million.
Liquid assets soared to €145.6 million while bank loans were trimmed to €35.9 million, giving a net financial position of €109.7 million at the end of the December, over twice the figure for 2010 (€47.9 million). A comfortable level of liquidity and access to adequate credit lines document KBA’s solid financial profile, as does the high ratio of equity to the bigger balance sheet total, which in 2011 was 38.2 percent.
Whilst implementing rigorous cost-cutting initiatives, KBA has not economized at the expense of innovation, and the proportion of R&D to total group sales was again around 5 percent. According to the Patent Scorecard for Heavy Industrial Equipment, published in the Wall Street Journal in January this year, KBA has moved up from 21st to 11th position among the top 50 international players, ahead of all other major German press manufacturers.