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KBA: Sheetfed Business Buoyant, Web Braked by Downturn

Press release from the issuing company

September 3, 2002 -- Würzburg. The Koenig & Bauer group (KBA), the world’s no. 3 manufacturer of printing presses and peripherals, bucked the industry trend to post higher growth in the first six months of the year. Group turnover from web and sheetfed presses climbed to _685.8m, 10.4% up on the same period in 2001. As expected, the order intake was lower (_549.9m compared to _731.6m), but picked up in the second quarter. Unless the global economy revives, group sales, particularly of web presses, will flatten out in the second half of the year. Though several large-scale projects are to be decided within the forthcoming months, KBA president Reinhart Siewert, expects a distinct improvement of the climate for large-scale press investments in the newspaper and commercial print industry not until business year 2003; provided that the economic upswing, if it comes, is accompanied by a big increase in advertising. Pre-tax earnings (ebt) fell by 18% to _16.8m (2001: _20.5m). However, this is still a respectable performance compared to other enterprises in the industry. With a net profit of _9.3m (_12.6m), net earnings per share on 30 June were 58 cents, against 79 cents 12 months earlier. The group payroll on 30 June totalled 7,520, 120 more than the same time last year. However, this includes 124 staff acquired with the merger of Karat Digital Press. Business Divisions Once again the sheetfed offset division outperformed its sector for the entire period, while sales of security presses and systems by KBA-Giori in Lausanne contributed to a 13.7% jump in sheetfed sales to _352.4m (2001: _310m). Although the total volume of incoming orders was 8% lower than in 2001 (_354.1m, against _384.9m), the previous year’s figure had received a one-off boost from KBA-Giori’s consolidation in the group accounts. The order backlog of _386.5m on 30 June was roughly the same as the year before (_394.9m). In the second quarter the web press division profited from the delivery of several big newspaper and rotogravure press lines, as a result of which shipments climbed by 7.1% to _333.4m (2001: _311.3m). However, with a few isolated exceptions, demand remained weak. Incoming orders totalled _195.8m, a sharp contrast to the previous year’s high figure of _346.8m. The volume of web press orders on hand at the end of the half-year fell to _579.8m from _922.3m in 2001, due to increased deliveries and the unsatisfactory volume of incoming orders. Outlook In the second half-year KBA anticipates a moderate volume of shipments. Based on its current backlog of orders for web presses and the outlook for sheetfed presses it is targeting group sales of around _1.25bn for the year. To achieve its goal of pre-tax profit on sales of around 4% KBA has initiated cost-cutting measures which will offset the additional expense arising from the merger of Karat Digital Press and the drop in plant utilisation at its web press facilities. Overtime and production hours are also being scaled back.