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KBA Orders Climb 15% In First 5 Months, Margins Tighter

Thursday, June 30, 2005

Press release from the issuing company

The volume of new orders booked by German press manufacturer Koenig & Bauer AG (KBA) in the first five months of the current business year was 15% higher than in the same period the previous year. But as president and CEO Albrecht Bolza-Schünemann was quick to point out at the group’s packed AGM, margins continue to be squeezed by downward pressures on selling prices and upward pressures on purchasing costs. In the current market environment it is almost impossible to pass on higher utility costs to consumers. Fluctuations in the exchange rates for the euro, US dollar and yen are also impacting on the group’s export-intensive business. Group sales in the first six months, though up on the relatively weak figure for 2004, will fall short of the €1.5bn target for 2005 (2004: €1.42bn). KBA therefore anticipates a pre-tax loss for the first half-year, figures for which will be released on 12 August. However, Mr Bolza-Schünemann stated that the group is on course to post a higher annual pre-tax profit than in 2004 (€15.9m). Alongside stronger sales this will largely be driven by a higher output and a more profitable product mix in the second half-year. Reporting on KBA’s diverse business activities, Mr Bolza-Schünemann revealed that continuous dynamic growth by the sheetfed offset division in Radebeul, near Dresden, since 1993 has moved the group up into second place behind Heidelberg in the German press manufacturing league. KBA is also a major global player in other key markets, eg for newspaper, publication gravure and security presses. But for Albrecht Bolza-Schünemann the group’s greatest achievement in 2004 was a return to profit by its web and special press division – an achievement that would have been nigh on impossible without some radical remedial action which included the closure of assembly plants in Berlin and Kusel. Active in almost every major print market KBA’s president and CEO is confident that, in the medium term, print will not only defend its position in the media arena as second only to telecoms and well ahead of TV and the internet, but in certain sectors (eg advertising and packaging) and certain regions (eg China) will even experience above-average growth rates. During the recent recession, unlike many of its rivals in the print industry, KBA continued to pursue a strategy of organic growth and prudent acquisitions to enhance its market standing. “We have built up a presence in virtually every major print market, with a product diversity and level of innovation that can stand comparison with any of our competitors, both big and small.” Ongoing investment in staff training, R&D and equipment upgrades is critical to maintaining KBA’s global competitive edge from its relatively costly base in Germany. With a view to expanding its market share, in March this year the group acquired Grafitec, a Czech manufacturer specialising in small-format sheetfed offset presses. Says Albrecht Bolza-Schünemann: “This makes us the first German press manufacturer to acquire a foreign production site with lower overheads.“ The location near the eastern border offers a lot of potential for growth. Shareholders approve dividend payment Shareholders discharged the managing and supervisory boards and approved a motion tabled by the two boards to utilise the parent company’s profit (under German accounting laws) of €5.1m to pay a dividend of 25 cents per share (total €4.1m) and carry forward the balance of €1m.




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