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KBA Reports Loss: Sheetfed offset presses up 13.2%

Press release from the issuing company

November 17, 2003 - For the first time in two-and-a-half years, German press manufacturer Koenig & Bauer AG (KBA) posted a double-digit (10.4%) leap in incoming orders to €854.3m (2002: €773.7m) at the end of the third quarter. However, although capital spending on new plant by the global print industry finally showed signs of picking up, a drop in shipments of web presses in the first half-year caused an 18.6% slump in group sales to €808.8m for the nine months to 30 September. Lower profit contributions from a diminished business volume, a big increase in research and development costs in the run-up to Drupa 2004, the definitive trade fair for the international media industry, and restructuring provisions for a capacity downsize at KBA’s web press production plants resulted in a pre-tax loss of €40.9m (2002: €35.7m profit) and a net loss of €26.2m (2002: €0.5m profit). The cash flow from current business activities totalled €40.9m, well above the prior year figure of -€19.6m. The group payroll on 30 September numbered 7,285, or 190 fewer than at the same time last year (7,475). At the end of the quarter management and staff representatives reached an agreement on additional payroll cuts. An assembly plant in Kusel will close down at the end of the year. The demand for sheetfed offset presses remained buoyant. Year on year, the volume of new orders climbed by 13.2%, to €482.2m. Sales in the first nine months totalled €422.5m, only slightly below the €448.2m posted in 2002, and fourth-quarter sales will be even higher as shipments increase. For the first time in 30 months there was a visible increase in new orders for web and special presses, a division badly hit by the economic downturn. The inflow of orders in the nine months to 30 September swelled to €372.1m, or 7% more than for the same period in 2002 (€347.7m). Sales, however, slid to €386.3m, 29.2% below the prior year figure of €545.6m. They will fall short of the 2002 annual total despite a higher volume of shipments in the fourth quarter. Nonetheless, KBA holds to its group sales objective of €1.2bn-plus for 2003. However, the reduction in output at its web press production plants in the first six months and the high outlay for remedial measures, in conjunction with unfavourable exchange rates and competitive price constraints, will result in a double-digit loss for the year. For 2004 the group anticipates substantial higher sales and earnings in line with increased plant utilisation at its web press facilities, particularly if, as expected, the global economy experiences a sustained recovery. The Drupa trade fair scheduled for May next year should also stimulate sales.