Orders give KBA confidence for 2012

Koenig & Bauer (KBA) said it is prepared to ‘defend our position as the world’s no.2 press vendor’, after reporting growth in order intake and backlog as of December 31, 2011.
 
At December 31, 2011, KBA said order intake had grown 21 percent, from €1.3 billion (US$1.7 billion) at the end of 2010 to €1.6 billion (US$2.1 billion). Order backlog grew 87 percent, from €441 million (US$589 million) to €826 million (US$1.1 billion).
 
By segment, order intake for web and special presses grew 48 percent to €983 million, while order backlog grew 143 percent to €678 million. KBA said brisk demand for security, metal decorating and coding equipment helped swell order intake to its highest level since the record year of 2006.
 
Conversely, sheet-fed offset press order figures took a tumble. Both order intake and backlog as of December 31, 2011 in this area were down eight percent, falling to €570 million and €149 million respectively. Flagging investment activities in the final third of the year contributed to this decline, it said.

‘We are well poised to emerge with confidence from the current wave of industry consolidation’

 
The two divisions each posted sales worth €584 million, an improvement of 5.9 percent over the prior year in sheet-fed sales, but a slide of 7.1 percent in sales of web and special presses following shipping delays. Overall sales fell one percent as a result.

A 34.3 percent rise in domestic sales trimmed exports from 88.5 percent to 84.4 percent. The proportion of group sales generated in the rest of Europe climbed from 28.5 percent to 35.6 percent, with higher sales of both sheet-fed and web presses contributing to the increase.
 
Despite a gain in sheet-fed orders, the proportion of the group total attributable to North America plunged to a low level of 8.6 percent. While the anti-inflationary monetary policy pursued in China put a temporary curb on sheet-fed sales, the contribution from Asia and the Pacific remained high at 27.4 percent. The 12.8 percent generated in Latin America and Africa was nearer its historical average than the 2010 figure of 20.6 percent.

‘We are also busy stepping up our activities in the packaging sector’

 
KBA recorded operating profit of €9.9 million in 2011, down from €22.2 million in 2010, owing to the rising cost of raw materials, heavy investment in new products, wage increases, unscheduled structural expenses and lower sales following external delays in deliveries, with net profit for the year down from €12.5 million to €0.4 million.
 
Cash flow from operating activities was €83.9 million in 2011, up from €30 million, following a jump in customer prepayments and a drop in trade receivables. Free cash flow was €57.8 million. KBA said it met all its capital requirements as a result, scaled back bank debts still further and boosted liquid assets.

KBA president and CEO Claus Bolza-Schünemann said: ‘We are working at full stretch to boost our performance on a sustainable basis and defend our position as the world’s no.2 press vendor through innovation, process optimisation and strategic market decisions.
 
‘We are also busy stepping up our activities in the packaging sector and broadening our commitment beyond sales and service in China, a major growth market. As well as driving growth by upgrading, streamlining and expanding our product palette, we are beginning to reap the benefits of the capacity adjustments we have made and the initiatives we have introduced to trim manufacturing costs.'

KBA management emphasized the higher risks that exporters face from slowing growth in major emerging markets, the high price of oil and ongoing debt crisis in Europe. While it expects Drupa to stimulate sales, and that a raft of new products will boost order intake particularly in the sheet-fed offset division, there will be no return to the high volumes of previous years. If market conditions remain stable KBA is targeting a single-digit percentage increase in sales and a higher pre-tax profit in 2012, although detailed projections will not be made until 2012 half-year results are reported.

Bolza-Schünemann added: ‘There is good reason to hope that, in the medium-term, ongoing consolidation in the sector will help to eliminate overcapacity among suppliers and lead to more disciplined pricing in the marketplace.
 
‘KBA is a solidly financed press manufacturer with a technologically advanced and uniquely diverse portfolio for a range of applications. So we are well poised to emerge with confidence from the current wave of industry consolidation.’