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KBA: Demand for Printing Presses Remains Weak

Friday, June 27, 2003

Press release from the issuing company

June 27, 2003 -- Würzburg. At his last annual shareholders’ meeting as president of Koenig & Bauer (KBA), Reinhart Siewert, who retires on 30 June, reported that demand for printing equipment, which has virtually stagnated for the past three years, shows no sign of picking up in the immediate future. In 2002 KBA bucked the industry trend to boost turnover by 3.8% to €1,353.8m and return a pre-tax profit of €43.2m. For the current year Mr Siewert reiterated his April prognosis of a 10% drop in turnover to around €1.2bn, largely because newspaper publishers continue to postpone major investment projects. But despite substantial restructuring expenses incurred by KBA’s web press operations – due in part to resistance by some parts of the workforce, which is delaying essential capacity- and cost-cutting initiatives – the group looks set to post a balanced result for the year as a whole. Negotiations with employee representatives, which have still not been concluded, revolve on the closure of two small assembly plants (Berlin with 114 employees and Kusel with 111) by the end of the year and 120 jobs being axed at each of the two main plants in Würzburg and Frankenthal. Half-Year Figures Reflect Sluggish Economy Preliminary figures for the first six months of the current year reflect an economy which has remained sluggish since 2001. Group turnover totalled €480m (2002: €685.8m), the volume of new orders €495m (2002: €549.9m). The final figures will be published on 14 August in the quarterly report. The slide in turnover and 10% drop in order intake are a direct result of the widespread decline in demand for web presses, which has reduced the volume of shipments. However, these are expected to pick up in the second half of the year. On top of this, a major security contract will boost the order backlog for web and special presses in July, while sales of sheetfed offset presses remain firm. Nonetheless, short time and capacity reductions at KBA’s German web press factories mean that the group will close the second quarter with a small loss. Reinhart Siewert was unable to quote more precise figures until the quarterly results have been finalised. KBA Poised for Growth in Print Markets Despite the ongoing difficulties experienced by the media, industry watchers predict that print will remain a growth market for the next 10 to 15 years, particularly in densely populated industrial countries like China. Already well placed in key sectors such as newspapers, magazines, catalogues, books and packaging, KBA is confident that its recent launches, and the innovative products and processes it will be unveiling at the Drupa international media trade fair in May next year, will enable it to defend its no. 1 slot in large-format sheetfed offset, publication rotogravure, security and newspaper press technology and expand in other areas. As soon as the economic climate permits, the group is looking to resume the high growth rates of the past 12 years, especially in sheetfed offset.




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