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KBA issues half-year results: Weak Demand for Web Presses Impacts Bottom Line

Press release from the issuing company

August 19, 2003 -- Group turnover by KBA in the first six months fell 26.9% below the prior year figure to EUR 501.3m, largely due to a drop in shipments of web and special presses. The order intake was just 1% down at EUR 543.3m (2002: EUR 549.9m). Along with the slide in plant utilization due to flagging sales, group performance was also affected by restructuring costs and by higher R&D expenses in the run-up to next year´s Drupa, the definitive trade fair for the print media industry. However, with sheetfed offset sales remaining buoyant, KBA is standing by its group sales target of EUR 1.2bn for 2003. A pre-tax loss of EUR 26.6m for the first half-year contrasts with earnings before taxes (EBT) of EUR 16.8m 12 months earlier. After tax the loss amounted to EUR 18.6m (2002: EUR 9.3m profit). Group sales and earnings were negatively affected by weak sales of web and special presses, largely due to an ongoing reluctance among newspaper publishers to invest in new equipment. Following delays in the implementation of downsizing initiatives at its web press production plants, and with exports and prices hit by a combination of the strong euro and weak demand in many print markets, KBA is set to report a post-tax loss for 2003. Exact figures are not yet available. Although sales of sheetfed offset presses, at EUR 271.3m, failed to match the 2002 level of EUR 301.5m, the volume of incoming orders beat the industry average to rise by 1% to EUR 308.0m. With demand stagnating for the past two years, sales of web and special presses dropped 40% to EUR 230m. However, shipments will increase substantially in the second half of the year. New orders totalled EUR 235.3m, 4.3% down on the corresponding figure for 2002. An ongoing slump in domestic demand pushed the level of exports up to 87.9% of total output, with Europe (48.9%), North America (17.5%) and the Asia-Pacific markets (16.6%) accounting for the lion´s share.