(September 26, 2008) Following a supervisory board meeting to discuss the latest financial figures, Koenig & Bauer AG (KBA) management board announced a downward adjustment in the 2008 earnings forecast issued on 31 March and reaffirmed at the AGM on 19 June in the wake of a highly successful Drupa trade fair. KBA anticipates a slide in group sales for the current financial year (ending 31 December) from €1.6bn to around €1.5bn. Pre-tax earnings, which were originally set to equal last year's figure of €63.2m, will turn negative in view of a considerable slump in sales of sheetfed presses, provisions for consolidating sheetfed production activities, and adjustments in inventory value.

On current form, sales of web and special presses will exceed targets. Nevertheless, the profit generated will not be sufficient to balance the sheetfed division's operating loss enlarged by provisions for restructuring measures and value adjustments.

The increase in sheetfed orders anticipated in connection with a sizeable volume of contracts negotiated at Drupa has failed to materialise. Particularly in the USA, but also in other countries affected by the present financial crisis and economic downturn, it is still proving difficult for printers to obtain corresponding funding. The already perceptibly reduced demand in the print media industry has softened further since summer 2008. This has impacted on all press manufacturers, and at KBA also on the web and special press divisions.

KBA management plans to compensate the foreseeable underutilisation of production capacities in the fourth quarter by making greater short-term use of its scheme of flexible working hours. Following a double-digit drop in the worldwide market volume for newspaper, commercial and sheetfed presses over the past eighteen months, KBA management has extended to the sheetfed division the capacity reductions initiated in the web division in September 2007. This adjustment to a probably longer spell of weaker demand, which will include human resources measures, will affect group facilities in Radebeul (Germany), Mödling (Austria) and Dobruška (Czech Republic).

KBA will publish further information with its quarterly report on 14 November.