33 Per Cent Sales Boost Points To KBA Profits

KBA has reported a 33% increase in demand for its first half-year following a three-year downturn in the press engineering industry.

KBA has reported a 33% increase in demand for its first half-year following a three-year downturn in the press engineering industry.

What the group described as its resounding success at Drupa in May boosted orders for both sheetfed and web offset presses in the six months to June 30.

Preliminary figures for KBA have revealed that the volume of incoming orders jumped approximately 33% to more than 720 million Euros.

Sales, however, at around 510m Euros were only slightly higher than 12 months earlier following changes in shipping and invoicing schedules.

That, coupled with extraordinary expenses relating to Drupa in the second quarter, will result in a group loss being posted in the official interim report due to be issued in mid-August.

The improvement in sales and earnings will work its way through to the bottom line in the second half of the year said KBA.

As previously reported, group sales in 2003 fell nine per cent to 1,231.8m Euros due to a general lack of demand.

Weaker sales and the cost of restructuring the web press division resulted in a group loss of 30m Euros last year.

Since dividends are based on the performance of the parent company, Koenig and Bauer AG, which posted a slightly higher loss of 38.7m Euros, management was unable to propose the payment of a dividend for the first time since the company went public in 1985.

Meanwhile, cost-cutting and efficiency-enhancing measures initiated at KBA's web press division in spring 2003 continue apace.

An assembly plant in Kusel was closed down at the end of 2003 and one in Berlin (KBA-Berlin GmbH) will follow at the end of this year.

Excluding the 300 staff taken on with the acquisition of Metronic in 2003, the group payroll will fall to 6,975 by the end of June, very close to the figure originally envisaged.

Organisational workflows have been streamlined, hierarchy levels stripped out and the management board reduced to five by merging sheetfed and web production into a single brief.

During the next few months the focus will be on finalising the implementation of a distributed manufacturing system said KBA.

The company has revealed that higher shipments in the second half of the year will lift group sales to around 1.4 billion Euros - the highest in KBA's 187-year history.

Although exports and margins have been hit by continuing pressure on prices for new and used machinery by the high cost of steel, the strong Euro and wage inflation, KBA is targeting a return to profit in 2004.

The company believes that the current high level of capacity utilisation driven by new orders makes that a realistic goal despite unsatisfactory prices.

KBA has reiterated that it has no ambitions to pursue what it described as the same risky strategy of diversification as some prominent competitors, who now find themselves forced to scale back and re-align their operations.

Instead it said it would continue to focus its competence on driving advances in major printing technologies and processes for key markets, such as promotional literature, books, magazines, newspapers and packaging and attractive niche applications.

Those would include ID technology, printing on data storage devices, metal decorating and security printing, for instance.

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