Koenig & Bauer AG Quarterly Report: Orders Up, Turnover Down
May 2008
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Defying the financial crisis, a strong euro and a pre-Drupa lag in demand for sheetfed presses, in the first three months of the year German printing press manufacturer Koenig & Bauer AG (KBA) posted a 5.5 percent increase in new orders to €370.3m (2007: €350.9m). Its web and special press division bucked the industry trend with major contracts from US and Turkish newspaper publishers, which helped boost the order intake by an above-average 10.6 percent from €180.2m to €199.3m. And despite a sluggish US market, the volume of incoming orders for sheetfed presses, at €171m, was roughly the same as the previous year (€170.7m).
As in the years 2004 to 2006, group sales fell well short of the prior-year figure (€301.7m, compared to €414.2m). While sheetfed sales of €144m were just 8 percent lower than in 2007 (€156.6m), sales of web and special presses slid by more than a third, from €257.6m to €157.7m. This is because most web presses will not ship until the second half of the year. As KBA president and CEO Albrecht Bolza-Schünemann put it: “accounting schedules have no bearing on shipping schedules.”
The shortfall in sales impacted heavily on results, with an operating loss of €5m (2007: €13.5m profit) and pre-tax loss of €6.4m (2007: €13m profit) lagging targets by a wide margin. KBA closed the quarter with a net loss of €1m (2007: €9.3m profit) and proportional earnings per share of -6 cents (2007: +57 cents).
The volume of unfilled orders for web and special presses rose from €565.9m to €611.5m, ensuring that the level of plant utilisation will be higher into the autumn than it was in the past few quarters. But the backlog of orders for sheetfed presses fell from €319.5m to €249m, so further contracts are needed to safeguard production in the second half-year. KBA is confident that the drupa trade fair that opens in late May will provide the necessary stimulus. Fluctuations in capacity utilisation in the first quarter were absorbed via flexible working hours. At the end of March the KBA group payroll stood at 8,181, or 108 fewer than at the same time last year.
Positive cash flow
Cash flows from operating activities surged to €88.6m from €41.5m twelve months earlier. An increase in customer down payments and a drop in trade receivables more than compensated for the liquidity tied up in bigger inventories for imminent shipments. The free cash flow swelled from €35m to €73.5m, while funds increased to €183.8m from €134m at the end of last year.
As in the years 2004 to 2006, group sales fell well short of the prior-year figure (€301.7m, compared to €414.2m). While sheetfed sales of €144m were just 8 percent lower than in 2007 (€156.6m), sales of web and special presses slid by more than a third, from €257.6m to €157.7m. This is because most web presses will not ship until the second half of the year. As KBA president and CEO Albrecht Bolza-Schünemann put it: “accounting schedules have no bearing on shipping schedules.”
The shortfall in sales impacted heavily on results, with an operating loss of €5m (2007: €13.5m profit) and pre-tax loss of €6.4m (2007: €13m profit) lagging targets by a wide margin. KBA closed the quarter with a net loss of €1m (2007: €9.3m profit) and proportional earnings per share of -6 cents (2007: +57 cents).
The volume of unfilled orders for web and special presses rose from €565.9m to €611.5m, ensuring that the level of plant utilisation will be higher into the autumn than it was in the past few quarters. But the backlog of orders for sheetfed presses fell from €319.5m to €249m, so further contracts are needed to safeguard production in the second half-year. KBA is confident that the drupa trade fair that opens in late May will provide the necessary stimulus. Fluctuations in capacity utilisation in the first quarter were absorbed via flexible working hours. At the end of March the KBA group payroll stood at 8,181, or 108 fewer than at the same time last year.
Positive cash flow
Cash flows from operating activities surged to €88.6m from €41.5m twelve months earlier. An increase in customer down payments and a drop in trade receivables more than compensated for the liquidity tied up in bigger inventories for imminent shipments. The free cash flow swelled from €35m to €73.5m, while funds increased to €183.8m from €134m at the end of last year.
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