KBA Profit Five Times Higher - Shortfall Wiped Out

In the third quarter the KBA group almost wiped out a shortfall from the first half-year with an order intake worth EUR527.3 million - the highest in any quarter in its history.

In the third quarter the KBA group almost wiped out a shortfall from the first half-year with an order intake worth EUR527.3 million - the highest in any quarter in its history.

Pre-tax earnings (EBT) more than trebled to EUR30.4m, up from the previous year's EUR8.9m, whilst net profit, at EUR22.4m, was more than five times 2005's level of EU4m.

New orders for the nine months to 30 September totalled EUR1,246.6m, just 4.8 per cent below last year's figure of EUR1,309.9m, which was boosted by a number of big contracts.

Sales climbed 8.9 per cent from EUR1,107.3m to EUR1,205.5m.

The EUR1,082m backlog of unfilled orders was roughly the same as in 2005 (EUR1,095.6m).

Group operating profit almost doubled to EUR30.1m, compared to 2005's EUR16.1m).

Following a slow half-year the sheetfed division picked up speed in the third quarter, bringing in new orders worth EUR299.7m.

The EUR664.4m order intake for the full nine months was a modest improvement on the high figure for 2005 of EUR661.8m.

Sheetfed sales, at EUR563m, were roughly on a par with the previous year (EUR561.4m).

A EUR413.1m backlog of orders will keep production busy at KBA's sheetfed plant in Radebeul until well in to the spring, added the company.

However, the order intake of EUR582.2m for web and special presses was 10.2 per cent below the prior-year figure of EUR648.1m.

The company said that whilst the volume of orders for security presses surpassed last year's high level, new bookings for newspaper, commercial and publication rotogravure presses were down compared to 2005.

Sales climbed 17.7 per cent to EUR642.5m (2005: EUR545.9m), reducing the backlog of unfilled orders to EUR668.9m (2005: EUR695.4m).

Commenting on the interim figures, KBA president and chief executive officer, Albrecht Bolza-Schunemann, said: "Steady growth by our specialist subsidiaries in the security press and electronic data media sectors was accompanied by increased revenues in our web press division and at our Czech subsidiary, KBA-Grafitec.

However, earnings by our sheetfed offset division were below target, primarily due to a lag in turnover that will be made good in the fourth quarter." The small-format Performa presses built by KBA's new Czech subsidiary, KBA-Grafitec, are already making a solid contribution to group sales and profits, added KBA.

Export level exceeded 82 per cent again.

Although domestic sales of sheetfed presses firmed, there were fewer installations of web presses.

As a result, the export level climbed to 82.5 per cent (2005: 80.2 per cent).

KBA's biggest foreign market was the rest of Europe, which generated 47.3 per cent of group sales (2005: 45.9 per cent), followed by Asia and the Pacific with 18.5 per cent, North America with 11.1 per cent and Latin America and Africa with 5.6 per cent.

KBA said that whilst the demand for printing equipment in Europe, the Middle East and emerging markets such as China remained firm, elsewhere it softened, though that may only be temporary.

In view of current uncertainties regarding exchange rates, the US economy, commodity and energy prices as well as the impact on the German economy of the imminent increase in VAT, the company's prognosis for the 2007 business year will not be issued until March.

Earnings per share improved accordingly from 25 cents in 2005 to EUR1.38.

KBA management reaffirmed its spring prognosis of annual sales in excess of EUR1.7bn and a pre-tax profit substantially higher than the EUR25.8m reported in 2005.

Higher earnings increased equity to EUR465.4m at the end of September (which stood at EUR449.4m at the end of 2005).

Since the balance sheet total increased, mainly as a result of the first-time consolidation of a new Stuttgart (Germany) subsidiary, KBA-Metalprint, the capital-to-assets ratio, which is already high for the engineering industry, remained virtually unchanged at 32 per cent, commented KBA.

The lift in earnings, a EUR123.1m reduction in trade receivables and a larger volume (EUR32.6m) of customer down-payments caused cash flows from operating activities to swell from EUR74.1m the year before to EUR93.9m, despite an EUR83.3m increase in inventories in preparation for higher turnover in the fourth quarter and a EUR55.9m reduction in other current financial payables.

The free cash flow rose to EUR66m (2005: EUR58.2m).

Funds stood at EUR192.5m, EUR63.5m higher than the year-end figure of EUR129m.

As at September 30, the KBA Group workforce totalled 8,307 people (2005: 7,866).

The additional 441 staff included 375 from the consolidation of subsidiaries KBA-Metalprint (297 people), KBA (UK) (43 exployees) and KBA-France (35 members of staff) as well as 66 hired by KBA's Radebeul (Germany), Austrian and Czech production plants.

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