KBA - Orders Up But Not Enough As Margins Squeezed

The volume of new orders booked by Koenig and Bauer AG (KBA) in the first five months of the current business year was 15 per cent higher than in the same period the previous year.

The volume of new orders booked by Koenig and Bauer AG (KBA) in the first five months of the current business year was 15 per cent higher than in the same period the previous year.

And whilst there has been a resumption of dividend payments, sales and earnings are lagging behind the company's targets.

But as president and chief executive officer (CEO) Albrecht Bolza-Schunemann was quick to point out at the group's AGM, margins continue to be squeezed by downward pressures on selling prices and upward pressures on purchasing costs.

In the current market environment it was almost impossible to pass on higher utility costs to consumers.

Fluctuations in the exchange rates for the Euro, US dollar and Yen are also having an impact on the group's export-intensive business, he added.

Group sales in the first six months, though up on the relatively weak figure for 2004, will fall short of the 1.5bn Euro target for 2005 (2004 showed 1.42bn Euros).

KBA said, as a result, anticipated a pre-tax loss for the first half-year, figures for which will be released on August 12.

However, Mr Bolza-Schunemann said that the group is on course to post a higher annual pre-tax profit than in 2004, which reached 15.9m Eruos.

Alongside stronger sales, that performance will largely be driven by a higher output and a more profitable product mix in the second half-year, he said.

Bolza-Schunemann revealed that continuous dynamic growth by the sheetfed offset division in Radebeul since 1993 had moved the group up in to second place behind Heidelberg in the German press manufacturing league.

He also added that KBA is also a major global player in other key markets for newspapers, publication gravure and security presses.

However, Albrecht Bolza-Schunemann believes that the the group's greatest achievement in 2004 was a return to profit by its web and special press division, which he said would have been almost impossible without some radical remedial action that included the closure of assembly plants in Berlin and Kusel.

KBA's president and CEO said he is confident that, in the medium term, print will not only defend its position in the media arena as second only to telecoms and well ahead of TV and the internet, but in certain sectors such as advertising and packaging, as well as certain regions like China, will even experience above-average growth rates.

He emphasised that during the recent recession, unlike many of its rivals, KBA continued to pursue a strategy of organic growth and prudent acquisitions to enhance its market standing.

Bolza-Schunemann said: "We have built up a presence in virtually every major print market, with a product diversity and level of innovation that can stand comparison with any of our competitors, both big and small." Continuing investment in staff training, research and development and equipment upgrades is critical to maintaining KBA's global competitiveness from its relatively costly base in Germany, he added.

With a view to expanding its market share, in March this year the group acquired Grafitec, a Czech manufacturer specialising in small-format sheetfed offset presses, which offers a lot of potential for growth.

Bolza-Schunemann commented: "This makes us the first German press manufacturer to acquire a foreign production site with lower overheads." The location near the eastern border.

Shareholders discharged the managing and supervisory boards and approved a motion tabled by the two boards to utilise the parent company's profit (under German accounting laws) of 5.1m Euros to pay a dividend of 25 cents per share (total 4.1m Euros) and carry forward the balance of one million Euros.

Back to top