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KBA and Cerutti Sign Agreement on Rotogravure Business

Press release from the issuing company

Würzburg, 27 September 2007. Press manufacturers Koenig & Bauer AG (KBA) in Germany and Officine Meccaniche Giovanni Cerutti S.p.A. (Cerutti) in Italy have signed an agreement transferring to Cerutti for an undisclosed sum all KBA's intellectual property rights (know-how, industrial designs and patents) relating to rotogravure printing presses for magazines, catalogues and decorative paper.
KBA will design and manufacture the folders for all new Cerutti publication rotogravure presses. In addition KBA will continue to provide after-sales service for the rotogravure presses it sold up to the date of the transaction.
The agreement will allow the two groups to optimise the development and manufacture of their products and to achieve substantial synergies. It will deliver major competitive advantages to printers operating publication rotogravure presses in a highly competitive environment that is being further exacerbated by the evolution of other printing process and new communication technologies.
Giancarlo Cerutti, President and CEO of the Cerutti Group, says: "We have always had great confidence in the role of rotogravure presses in the market, and we have always defended it. Our investment is evidence of this confidence. This agreement will enable our customers to take advantage of the benefits deriving from the synergies between two primary market players."
Claus Bolza-Schünemann, Deputy President of KBA, says: "In view of current market developments, this agreement is in the interests of both parties and, ultimately, of all gravure printers throughout the world. And with consolidation intensifying among users, it was an inevitable move. We shall support Cerutti with top-quality folders and continue to provide a highly competent after-sales service for existing KBA gravure presses."
The agreement was approved by KBA's supervisory board at its latest meeting. The sale to Cerutti of KBA's gravure business, which for some time has felt the impact of weak demand in the gravure market, will lead to personnel changes at KBA's production plant in Frankenthal. As KBA president Albrecht Bolza-Schünemann had already announced in the company's half-year report published in mid-August, slack demand in the newspaper industry during the past eighteen months also means that capacity must be reduced at KBA's newspaper production plants. The scenario envisaged by the board of directors for downsizing capacity and safeguarding earnings will first be discussed by the competent worker committees before concrete figures are released. Despite the slide in demand for multi-unit press lines the KBA board reaffirmed its forecast that group profit and pre-tax earnings in 2007 would be roughly on a par with the previous year.