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MAN Roland streamlines production in response to weaker graphic arts demand

Press release from the issuing company

Offenbach, Germany — The MAN Roland Druckmaschinen Group has launched a package of measures designed to save around EUR 130 million over the next few years, as demand for capital equipment in the graphic arts remained weak in 2002. The world's second largest printing systems manufacturer and market leader in newspaper printing expects the efficiency moves to provide savings in each of its three business sectors. . . • EUR 80 million in the sheet-fed press sector • EUR 35 million in the web press sector • EUR 15 million in the trade and services sector and the international sales network. “The package is designed to continuously strengthen the MAN Roland Group's earning power and improve its market position,” a spokesman said. “Fundamental objectives are to streamline the organization and thus accelerate reaction time to changing market conditions.” The cost of the restructuring and a decline in sales mean that the company’s pre-tax earnings of EUR 10 million are significantly lower than the previous year's figure of EUR 89 million. “The MAN Roland Druckmaschinen Group was able to hold its own in an exceptionally difficult market during the 2002 financial year,” the spokesman added. “Internationally, the situation in the graphic arts industry remains tense. Weaker demand means that competition and pricing pressures will continue to be tough. The underlying cause of the current situation is the slump in the advertising market that has made many printing companies and publishing houses put their investment plans, if only temporarily, on hold.” During 2002 MAN Roland achieved EUR 1.542 billion in new orders, down 23% compared to the previous year. The total included EUR 701 million for sheet-fed systems (-16%), EUR 613 million for web-fed systems (-32%), and EUR 228 million for trade and services (-11%). Sales of EUR 1.808 billion were down by 13% in 2002. Sheet-fed system sales came to EUR 706 million (-24%); web system sales were EUR 869 million (-2%), and trade and services sales were EUR 233 million (-11%). As in 2001, export sales accounted for 79% of the total. As of December 31, 2002, orders on hand amounted to EUR 904 million, or 29% less than on the last day of December 2001, the result of weak market demand. Workforce changes The MAN Roland Group workforce was reduced from 10,570 to 10,300 in 2002. Despite taking on 115 apprentices during the reporting period, the number of employees on the payroll, including those in the Group’s newly consolidated companies, was reduced by 752. This figure represents a total reduction in permanent staff of 576 positions. A total of 373 positions are currently being eliminated in the sheet-fed press sector as part of the planned facilities consolidation measures. In addition, further personnel adjustments are planned for both the sheet-fed and web press sectors, and for the sales companies. Investments with a view to the future During 2002, EUR 69 million were spent for leasing agreements, rationalization measures, replacements and reinvestments, and for the restructuring. That compares to the 2001 total of EUR 63 million. Results and outlook Commenting on pre-tax earnings, MAN Roland reported that while its web press sector operating results were very good, both its sheet-fed press sector and trade and services sector recorded losses. “The shortfall in the sheet-fed press sector is primarily due to our ongoing consolidation of production plants in Offenbach,” the spokesman said. The decline in trade and services income was attributed to shrinking volume caused by the weak marketplace, particularly in such areas as prepress, finishing, and consumables. “Looking at the 2003 financial year, MAN Roland expects new orders and sales to be roughly in line with last year's levels,” the spokesman said. “A significant improvement is anticipated because of more favorable economic conditions, the push from the drupa 2004 trade fair, and the positive effects of the efficiency improvement program and its streamlining measures.”