Würzburg. Press manufacturer Koenig & Bauer AG (KBA) has revealed that the inflow of orders in the first quarter surged to €382.4m, 23.5% up on the prior year period, with the sheetfed division outclassing all rivals to post a 40.3% jump in bookings to €243.9m. New orders for web and special presses lifted 2% to €138.5m. Group sales for the quarter totalled €311.3m, 20.7% higher than twelve months earlier. Sheetfed sales climbed 16.4% to €168.1m, web and special press sales rose 26.2% to €143.2m.
However, a return to profit in 2004 was followed in the first quarter by a pre-tax loss (EBIT) of €4.2m (1st quarter 2004: -€3.6m) and a net loss for the quarter of €4.8m (2004: -€3.9m). This “temporary glitch” was caused by the quarterly turnover, which fell short of annual targets, by higher prices for materials and by poor margins arising from some contracts booked in previous years.
Although bigger inventories temporarily tied up liquidity, this was outweighed by a reduction in accounts receivable and a rise in customer down payments. The cash flow from operating activities swelled to €38.2m, a big improvement on 2004 (-€2.4m). There was a similar improvement in the free cash flow (€32.2m, against -€14.7m twelve months before).
Production plants humming
The huge order backlog will keep KBA’s German and Austrian production plants busy until well into the last quarter. The sheetfed and web presses launched at Drupa last year are already generating a large proportion of incoming orders. And even though a brisk demand for sheetfed offset presses and the delivery of commercial and publication gravure presses have boosted domestic sales, the group still exports 81.7% of its total output.
At the end of the first quarter there were 7,334 employees on the group payroll, an increase of 31 over the previous year. This was solely due to the addition of 50 staff following the consolidation of Bauer+Kunzi. Whereas the number of employees at KBA’s web production plants decreased by 162, the sheetfed division hired an additional 131 staff to support its dynamic growth.
2005 sales and profits targets reaffirmed
Despite the red ink, KBA management has reaffirmed the group’s objective, announced in early April, of boosting sales to around €1.5bn (2004: €1,423m) and improving pre-tax earnings, which in 2004 totalled €15.9m. The gains delivered by cost-cutting initiatives – now completed – at KBA’s web press production facilities and by more flexible labour agreements at all its German operations will soon work through to the bottom line, along with broader profit margins for new presses soon due to ship.
Citing the lacklustre economy in Germany and other key regions, uncertainty in currency markets regarding the movement of the euro against the dollar and yen, relentless pricing pressures in key segments and higher prices for steel and other commodities, KBA president and CEO Albrecht Bolza-Schünemann announced that a more detailed projection will have to wait until later in the year, when management is better able to assess the impact of external factors such as these.
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