Diversification to drive KBA

KBA said sales and order intake in 2013 were lower than the previous year, which benefitted from the Drupa trade show in the spring of 2012.

At 1,012.2 million EUR, group order intake in 2013 failed to top the previous year by 9.3 percent and group sales of 1,099.7 million EUR were 15 percent lower than the prior-year figure. Whereas sales in the sheet-fed offset division sank by 11.1 percent to 571.9 million EUR, revenue in the web and special press segment was down by 18.9 percent to 527.8 million EUR.

Demand in KBA’s traditional business with newspaper and commercial web presses, which has been reduced to a great extent in recent years has left its mark, while the above-average business volume in the special market for banknote printing systems in previous years is now returning to a normal level.

Order intake in the sheet-fed segment of 608 million EUR was 8.9 percent below 2012 and compared to the previous year new orders of web and special presses declined by 9.9 percent to 404.2 million EUR. Group order backlog to 31 December reached 560.5 million EUR (648 million EUR in 2012).

Positive earnings in the operating business were strained by one-off impairments and high provisions for special expenses. These resulted from the Fit@All program for the realignment of the KBA Group passed in December 2013.

KBA chief executive officer and president Claus Bolza-Schünemann stated in his letter to shareholders that: ‘The financial repercussions of this project will also be noticeable for KBA in 2014. However, in 2015 we anticipate a notable turnaround in earnings and a return to sustained profitability by 2016 at the latest.’

Looking forward, KBA refers to the positive growth prospects for the global economy and machinery manufacturing industry in its outlook for 2014. Nevertheless, the KBA management does not anticipate sustained growth of the declining market volume in traditional sheet-fed and web offset market segments in 2014 and beyond. This is primarily due to ongoing structural shifts and trends towards consolidation in the print industry.

In contrast, the management sees opportunities for growth in other areas of KBA’s broad portfolio. These include the expandable field of digital printing, industrial coding systems and the diverse field of packaging printing. Acquisitions in the second half of 2013, Kammann Maschinenbau in Germany and Italy's Flexotecnica, allow KBA access to market segments which the group had previously not addressed.

Along with the integration of the new subsidiaries, 2014 will be marked by the implementation of the comprehensive program for the realignment of the KBA Group. The management board expects further expenses in 2014 due to the upcoming relocation of production equipment, adjustments to capacity, training and other measures.

For the new fiscal year, KBA management is targeting 1-1.1 billion EUR in Group sales and a positive operating result before special items. Group earnings before taxes (EBT) after special items will likely be negative once again in 2014 as the profit increasing measures associated with Fit@All will have not yet fully come into effect.