KBA-First Loss In 10 Years But Icy Market Thaw Due

The 2003 results for German press manufacturer Koenig and Bauer (KBA) reflect the glacial climate in the printing industry, with its first deficit in 10 years - a net loss of 39.6m Euros.

The 2003 results for German press manufacturer Koenig and Bauer (KBA) reflect the glacial climate in the print media industry over the past three years, with its first deficit in 10 years - a net loss of 39.6m Euros.

However, KBA said a 15.8% jump in new group orders to 1,255.8m Euros gives promise of an upturn in the market for the first time since 2000, with the group targeting a return to profitability for 2004, although it is unable to estimate the size of potential profits until the summer.

The financial statements for the parent company, Koenig and Bauer AG, which are prepared in accordance with German accounting laws (HGB) and are the basis for dividend payments, showed a net loss of 39.6m Euros against a 2002 profit of 17.9m Euros.

At the AGM scheduled for June 24 2004 in Wurzburg (Germany) the management and supervisory boards will announce the cancellation of a dividend payment for the first time since the company went public in 1985.

Earnings per share of 1.75 Euros for 2002 were transformed into a 1.86 Euros loss for 2003.

In 2003 the KBA group posted a loss for the first time since acquiring Planeta in 1993.

The main causes were the slump in web press sales, currency losses in North America caused by the massive devaluation of the dollar relative to the Euro, intense pricing pressures in the market and the heavy costs incurred in downsizing capacity at the group's web press production plants.

A 1.9m Euro operating loss and a one-off expense of 45.1m Euros from the closure of two minor assembly plants and redundancies at the main factories in Wurzburg and Frankenthal resulted in negative earnings before interest and taxes (EBIT) of -46.1m Euros (2002: +46.3m Euros) and a 49.6m Euros loss from ordinary activities.

After factoring in deferred taxes the KBA group posted a net loss of 30m Euros for 2003 (2002: net profit of 28.1m Euros).

Both KBA's sheetfed offset (+14.5%) and its web and special press division (+17.2%) booked big increases in orders.

At 1,231.8m Euros (2002: 1,353.8m Euros), group sales were just 9% below the previous year's record level.

Despite the slide in the US dollar, sales of sheetfed offset presses stood at 617.5m Euros, roughly on a par with the previous year (619m Euros).

These contrasted with a 16.4% drop in web press sales to 614.3m Euros (2002: 734.8m Euros).

Although the volume of orders on hand for sheetfed offset presses swelled by 19.4%, a drop in new orders for security presses caused the order level for web and special presses to shrink by 2.9% to 597.3m Euros.

On the whole the level of plant utilisation at KBA's newspaper, commercial and gravure facilities in western Germany has improved substantially since summer 2003 and is now much higher than in the previous year, when short-time work was introduced on a prolonged but temporary basis.

Results for the different KBA group market sectors reveal a sharp contrast in the performance of its two divisions.

Whereas the sheetfed offset division posted an operating profit of 19.9m Euros, its web and special press division returned a loss of 66.9m Euros (2002: 29.2m Euros profit) as a result of the high one-off restructuring expense and severe pricing pressures in the market.

At 45.3m Euros, total group investment in intangible assets, property, plant and equipment was significantly lower than depreciation at 57.2m Euros.

Investment activities focused on rationalising production and enhancing core competences.

Downsizing the web press facilities reduced the group payroll by 337 in the course of the year to 7,054 (2002: 7,391) and a further reduction is planned in 2004.

Three years of economic stagnation in Germany pushed up the company's exports to a record high of 87.4% (2002: 81.1%).

The company said that 46.7% of group sales were generated in the rest of Europe, 16.4% in North America and 19% in Asia and Australia.

China is fast becoming the biggest market for KBA products in the Far East.

KBA's innovation drive in preparation for Drupa 2004 had seen research and development focused on creating new products and processes.

KBA has claimed that the range of sheetfed and digital offset presses it will exhibit will be the most diverse and advanced at the show.

It has also launched new newspaper, commercial web offset, publication rotogravure and sheetfed flexo presses, some of which address totally new markets.

R and D costs at the company climbed by 9.8m Euros in 2003 to 57.6m Euros.

Despite a lacklustre economy, geopolitical instability and the pressure on prices caused by the slide of the US dollar against the Euro and the Japanese yen, KBA's management said it is confident that brisker sales of web presses and the higher volume of orders on hand in the early months of the current year will help to boost group sales in 2004, while new products aimed for launch at Drupa 2004 will generate more sales in the short-term sheetfed market in the second half of the year.

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