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manroland setting the course for growing stand-alone

Monday, September 20, 2010

Press release from the issuing company

The Executive Board and investors at manroland AG, the second-largest manufacturer of printing systems in the world, have agreed on a corporate growth strategy to ensure lasting independence.

The global market for printing systems has changed distinctly over the past few years: In the established industrial countries, the market is characterized by a drop in volumes and consolidation, however dynamic growth is taking place in the emerging markets and manroland is playing a major role here. "These newly implemented measures allow us to actively respond to changing conditions and position ourselves for future growth. We are convinced that manroland must seize these opportunities as a company on a stand-alone basis," explains Gerd Finkbeiner, CEO of manroland. To remain successful in the long run, manroland must make adjustments to its structures and processes. As a result, the three German production sites will be assigned clear core competencies. In addition, the main focus is firmly on growth markets and the services sector.

Supported by the major investor
As a long-term oriented investor Allianz Capital Partners welcomes this clear decision for a stand-alone solution and supports the necessary restructuring. "We are pleased about the clear support of our investors," adds Gerd Finkbeiner.

The strategy for lasting independence includes the following points:

1. An unchanged basic structure: manroland will continue to build systems for sheetfed printing and web offset printing at three sites. Each of the three sites will be assigned a specific core competence:
- In the future, the sites in Augsburg (web offset presses) and Offenbach (sheetfed presses) will concentrate exclusively on manufacturing complex parts and assembly.
- The Plauen site will become the business sector for industrial production. As a competence center for mechanical production and module assembly, the Plauen plant will manufacture products for manroland and other customers.

2. Integration of the business activities for the sheetfed and web offset sector:
- Consolidation of the business units for small newspaper presses (until now at the Plauen site) and large newspaper presses at the Augsburg site.
- Centralization of electronic activities.
- The foundry in Offenbach will provide both business sectors with cast parts.
- Concentration of the central functions for the Group at the Augsburg site.

3. Establishment of a new Technical and Industrial Services business sector consisting of about 300 employees who will focus on the following activities:
- Industrial consultation
- Subcontracting of highly qualified technical experts.

The planned measures will likely lead to reductions in staffing levels by 500, mainly in administration. As a result, the number of employees will drop to about 6,000 by the end of 2012. This includes previously announced job losses, measures for semi-retirement, and natural employment fluctuations. Our objective is to keep job losses at a socially acceptable level. Talks with labor representatives have been entered into.

"These measures are oriented towards an order volume of 1.4 billion euros in our core business, which is around 70 percent of the high of 2007. Greater integration of our business activities and implementation of consistent processes will make us leaner, more efficient, and more effective in the future. The two new business sectors, Industrial Production as well as Technical and Industrial Services, will also open up new business opportunities for us," states Gerd Finkbeiner.

All of these measures are planned for completion by mid 2012. The associated savings are estimated at 50 million euros annually, and will be fully realized from 2013 onwards.

Future growth as an offshoot of the core business
Overall, the intended structural changes will strengthen the core business and thus go hand in hand with the new concentration on future markets and the services sector.

Sales generators such as emerging markets are of special importance for manroland's business, which is why the company took over control of the sales and service networks in India, Latin America, southern Africa, Australia/Pacific and Southeast Asia just over a year ago. The market organization that was developed in-house has proven itself in growth markets and has already achieved great success.

manroland is pursuing a low-cost strategy to support growth in the emerging markets. In this regard, the company recently concluded a cooperation agreement with the US manufacturer Tensor. This collaboration will open up new market segments for manroland in attractive regions: The target markets include Central and South America, Canada and Mexico (part of NAFTA), Southeast Asia, and Southern Africa. manroland is pursuing cooperation, as it enables us to quickly and flexibly raise our regional profile in target markets.

In the digital printing sector, manroland is still looking for suitable collaboration with an established provider.

Over the past few years, the share of the service business has constantly increased and is now at just over 30 percent. This business sector promises further growth in the future, and manroland expects an increase in sales in the printservices sector (maintenance and service, as well as spare and wear parts) of over 7 percent annually. Furthermore, the business for consumables (printcom) and consultation (printadvice) is expected to continue to grow at a similar rate.

The Executive Board is convinced that manroland will be able to meet these challenges best as an independent company that has worldwide market coverage and a strong range of products and services. By following the previous course and setting off in new strategic directions, the company will be able to grow beyond its core business and remain profitable for the long-term.




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