KBA scales back expectations for 2013

Koenig & Bauer (KBA), the world’s second biggest press manufacturer, has scaled down its expectations for 2013.

In the third quarter, the volume of new orders for the KBA Group was 7.4 percent up on the corresponding figure for 2012. For the whole nine months, however, order intake at €709.6 million was 14.1 percent down on the corresponding period last year, which was boosted by Drupa.

Additionally, postponed special press shipments led to a 20.3 percent drop in group sales to €729.9 million compared to the previous year. Group order backlog of €627.7 million at September 30 was also lower than in 2012.

Due to the shortfall in sales and restructuring expenses the operating result came to a loss of €10.7 million in comparison to a profit of €18.9 million last year. KBA posted a pre-tax loss of €16.3 million. Group net results stood at a loss of €20.2 million, down from €4.5 million in 2012.

As a result, the management of KBA is now seeking to sustainably improve earnings by advancing the realignment of the group.

By the end of the year KBA expects negative impacts from restructuring expenses and impairments, the exact amount of which is currently not quantifiable.

KBA aims to compensate at least in part for the loss in business volume in other fields and sustainably strengthen profitability by expanding its service activities and product portfolio for growing market segments.

By market, KBA said it has recorded diverse development within the technology segments it operates in.

The company has a broad portfolio of sheet-fed, web, special and digital press lines addressing different print markets, and is particularly feeling the effects of the significantly reduced market volume for web presses. In addition, business with sheet-fed offset presses and systems for banknote printing was more restrained than expected.

In the third quarter of 2013, KBA said it achieved the highest figure for the last four quarters in its sheet-fed offset segment with new orders from July to September totalling €164.7 million, with the company’s strong position in the folding carton and metal decorating segments benefitting it.

However, after nine months order intake of €458.5 million in this division was 11.5 percent lower than last year’s figure, which again benefited from Drupa. At €381.4 million, sales were a 3.5 percent below the previous year

Despite KBA’s strong position in newspaper printing and the first orders for the new digital press, new orders in the web and special press fell 18.5 percent to €251.1 million.

Along with investment reluctance of web printers, the security press business has slowed since the previous year, KBA said.

To September 30, sales of web and special presses came to €348.5 million, around two-thirds of the 2012 figure of €520.8 million. Insufficient capacity utilisation at KBA web press facilities and a smaller earnings contribution of special presses reduced operating result after nine months from €40.2 million in 2012 to negative €2.9 million.

Following initial market success in digital printing, Kammann Maschinenbau, a profitable niche vendor and global market leader in printing systems for directly decorating glass containers joined the KBA Group in the third quarter.

The majority takeover of the Italian press manufacturer Flexotecnica, which serves the expanding flexible packaging market, will also be completed shortly.

By geographic location, KBA reported a bump in domestic sales of almost 50 percent. This reduced the export rate to close to 80 percent, including a lower than the historical average of shipments to other parts of Europe due to ongoing economic difficulties.

Elsewhere around the world, revenue in the Asia-Pacific region rose from 24.4 percent to 28.9 percent, while North America contributed 11.2 percent, and Africa and Latin America 15.1 percent to the group total.

Despite expected strong sales in the fourth quarter typical for the industry, KBA management expects lower annual group sales of around €1.1 billion compared to last year, which was close to €1.3 billion.

It said revenue generated from web and special presses will fall further behind last year than sheet-fed presses, while the KBA subsidiaries targeting metal decorating and industrial coding will reach or even exceed their targets.

In an update to its financial predictions, KBA’s management now considers the previously announced sales and earnings targets for 2013, which were already subdued in the half-year report, to be no longer attainable.

Dr Axel Kaufmann, KBA’s chief financial officer, said: ‘Along with the total group sales to be generated by the end of the year, the product mix delivered as well as the extraordinary expenses for restructuring measures and impairments will have a significant impact on the annual result in the group.

‘Currently this amount is not yet foreseeable, but will lead to a loss in 2013. Excluding special items, we are still targeting a positive operating result and balanced group earnings before taxes’.

KBA chief executive officer Claus Bolza-Schünemann (pictured, top) added: ‘We will provide further information on group realignment by the end of the year as soon as the concept planned is adopted by the management and supervisory boards.’

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