Ad Slump, Global Downturn Hurts KBA Sales: 7.4% drop in new orders

Press release from the issuing company

May 16, 2003 -- The economic downturn and subsequent advertising slump sent group sales sliding 19.5% to €241.2m in the first quarter. The volume of new orders fell 7.4% to €231.2m. Restructuring costs and a decline in web press production resulted in a post-tax loss of €2m. But although annual group sales are expected to be 10% down at around €1.2bn, we are targeting a return to profit for the year as a whole. A more precise prognosis cannot be made until the political and economic situation has stabilised. The group order backlog at the end of March was 21.3% lower than 12 months earlier. While our sheetfed offset plant remains busy, with four months’ production in hand, short-time work at our web press plants, which have been running at well below maximum capacity for the past nine months, has been extended until the end of September. Sales of sheetfed offset presses, a market with relatively short lead times, remained steady at €141.2m (1st quarter 2002: €143.7m). Two years of sluggish demand for web presses, however, caused turnover in this division to contract from €155.8m to €100m. Although KBA has always been an international player, weak domestic demand in the first quarter pushed up the level of exports to a historic high of 90%. Our biggest markets were Europe (43.9%), Asia/Pacific (22.1%) and North America (16.6%). Discounting the 400-plus loan contracts terminated in 2002, the group payroll, at 7,331 including apprentices, was 284 smaller than a year earlier. Management and employee representatives are currently negotiating further measures to downsize capacity in line with market demand. These include layoffs and the possible closure of smaller assembly plants. Concrete figures are not yet available.