Sean Milmo, Ink World European Editor01.20.11
The steady expansion of European printing equipment manufacturers into the ink sector is accelerating due to the current troubles of the print media stemming from the rapid rise of the internet.
Makers of print presses in Europe – led by the Big Three from Germany of Heidelberg, manroland and Koenig & Bauer AG (KBA) – are being forced to diversify their businesses in the region and elsewhere in the developed world in the search for new sources of revenue and profit.
One consequence of the restructuring of the printing equipment sector in the wake of the recession is that the machinery manufacturers will become even more involved in the development, production and distribution of inks. Companies whose main business is the production and sale of inks to printers using conventional processes face, as a result, even more competition in a market where profit margins are under severe pressure.
Setting Up Distribution Networks
In the distribution of inks and other consumables, the machinery makers are building up a strong position in Europe because of their networks of sales offices. Even some leading ink companies are now using equipment manufacturers as the main distributors of their products in some countries.
Late last year, Flint Group announced that it had appointed Heidelberg’s subsidiary in Finland as its exclusive distributor in the country of its sheetfed offset inks, pressroom chemicals and blankets. Flint believes it can benefit from Heidelberg’s concept of a one-stop source for a balanced portfolio of inks, pressroom chemicals, blankets and other consumables. Heidelberg already distributes Flint’s sheetfed inks in Russia.
“We have a positive relationship with Heidelberg and it is always possible that we could conclude more distribution agreements with them in the future,” said Peter Baird, Flint Group’s European marketing director for print media.
Both KBA and manroland are targeting digital printing for expansion, while Heidelberg is thought to be looking for a major partner in the field. All three also want a broader presence in packaging, extending beyond the making of equipment.
In the post-recession period, the digital sector in Europe will almost certainly be one of the fastest growing in the printing market. There is in fact a widespread belief in the sector that the whole future of printing lies in digital-based technologies.
Although there were signs last year of a strong recovery in orders in Europe for conventional printing machines, sales were still below the levels before the recession.
In the first nine months of 2010, KBA reported a 47 percent jump in orders to just over €1 billion ($1.3 billion). Sales rose by 5 percent while pre-tax losses dropped from €38 billion to €7 billion. During the third quarter, higher sales provided a pre-tax profit of €15 million, raising the prospect of the company being able to pay an annual dividend again after a two-year hiatus.
“Our efforts ( at adjusting to new market conditions) are finally reflected in the bottom line,” said Helge Hansen, KBA’s president and CEO. “However, global demand is still well below pre-crisis levels and excess capacity continues to plague press manufacturers. The result is a harsh market climate of unsatisfactory price and delivery conditions for many projects with no end in sight.
“The market for new presses in 2011 will still be significantly smaller than in 2006 and 2007,” he continued. “Burgeoning sectors such as packaging will contrast sharply with declining markets for books, catalogs and newspapers.”
In the first half of its financial year to the end of September, Heidelberg increased sales by 18 percent and orders by 33 percent to €1.4 billion. The net losses for the period dropped to €88 million from €147 million in the first half of 2009.
“The restructuring measures of recent years are paying off,” said Dirk Kaliebe, the company’s chief financial officer. “Heidelberg has a much more stable financial structure and in on track to becoming profitable.”
manroland, now owned by the private equity arm of Allianz, the German insurer, continued to incur losses in 2010. Despite forecasting a strong sales increase in 2011, Gerd Finkbeiner, the company’s chairman, does not expect manroland to return to what he calls a “satisfactory capacity” until next year. Its utilization rates for manufacturing of newspaper presses are still around 50 percent and offset machines about 60 percent.
Profitability of Services
For manroland and Heidelberg, services, including distribution of inks and other consumables, technical support and consultancy activities, offer a major opportunity for further diversification.
In the first half of its 2010-11 financial year, sales of Heidelberg’s services division rose by 15 percent to €538 million. It also recorded a €37 million operating profit while its equipment division recorded a loss of €87 million.
Its consumable business is one of its star performers in its services operation. Since the company first entered the consumables sector nine years ago, it has achieved double-digit growth in sales every year.
The company is focusing on providing quality inks by exercising increasing control over properties to enhance their performance, especially on Heidelberg’s own machines. Inks are a key part of a strategy aimed at helping printers improve their productivity through the provision of services like color management guidance and business management analysis.
“Using approved and coordinated consumables is vital, in my view, to ensure maximum quality and productivity,” said Marcel Kiessling, member of Heidelberg’s board responsible for services.
Although it continues to distribute inks under non-Heidelberg brand names, such as those of Flint, Heidelberg has been putting a lot of resources building up Saphira, the brand name for its inks, coatings and other printroom products. In collaboration with ink formulators and producers, it has introduced a Saphira range with properties like fast setting, rub resistance, high gloss and intense colors throughout the printing run. In line with its corporate strategy of environmentally responsible printing, it has developed Saphira Bio inks derived from renewable raw materials.
In the coatings segment, Heidelberg took over two years ago a high-performance coatings manufacturer, Hi-Tech Coatings of the UK and Netherlands, to give Saphira a strong position in the coatings consumables market in packaging and other printing materials. The Saphira portfolio now includes barrier coatings and customized coatings products.
manroland has now made services including inks and other consumables a core part of its operation. “A central pillar of manroland is its services sector,” said Thomas Hauser, the company’s head of corporate marketing and communications.
Its services division has three units – printcom for inks and consumables, print services for integrated services and training activities and printnet for software products and workflow management systems.
“Our objective is to provide approved inks which are made by preferred partners in ink production in Europe and other regions,” explained a manroland official. “The inks are made to our specification and if necessary, can be customized to meet the specific requirements of printers.”
The Digital Market
The strategies being followed by press makers in consumables will fit well with a big move into digital printing, where the OEM equipment manufacturers have always kept a tight grip on the development, formulation and production of inkjet inks and toners.
The manufacturers of conventional presses are emerging as attractive partners to OEMs in digital printing because of their distribution networks, expertise in consumables and services as well as strengths in engineering.
manroland and the Netherlands-based Oce Printing System, a subsidiary of Canon of Japan, announced in December an alliance in inkjet printing for the graphics arts industry. It will cover consulting, systems, services and materials, with the aim of bringing offset and digital processes closer together in applications such as books, advertising, inserts, catalogs and brochures.
“This is the first concrete step in opening up new growth opportunities for manroland and in securing a lucrative field of business for the long term,” said Mr. Finkbeiner.
manroland already has a collaboration agreement with Kodak on the development of inkjet heads and systems for newspaper printing.
“There is no conflict of interests,” said the manroland official. “With Kodak, we are developing an integrated inkjet printing systems for newspapers. The agreement with Oce is a strategic cooperation in marketing, sales and services for industrial inkjet printing as well as in the development of equipment like folders and integrated varnishing systems. Other joint developments are not excluded in the future.”
Heidelberg is rumored to be seeking a large partnership with Kodak in digital printing only six years after it sold to Kodak its share in the two companies’ Nexpress joint venture in inkjet.
As part of its restructuring after the recession, Heidelberg set up Linoprint, a drop-on demand inkjet business targeted at the needs for digital printing machines within integrated packaging lines.
Last summer, Linoprint entered into a partnership with Pelikan, a Swiss-based ink producer, for the development of inks for drop-on-demand inkjet printing.
“Combined with out Linoprint technology, (Pelikan’s) expertise enables us to develop and manufacture inks that are specifically tailored to our customers’ requirements,” said Stephan Pienz, member of Heidelberg’s board responsible for equipment.
In August, KBA split its relatively small digital printing arm KBA-Metronic AG, which supplies a large range of customized inks, into two separate entities – KBA MetroPrint AG and KBA-Metronic GmbH. The latter is concentrating on marking and coding activities with inkjet and laser technologies.
KBA wants to become a far bigger player in digital printing. It is what the company calls part of“a new, high-potential field of operation” which KBA is trying to establish alongside its existing core activities based on conventional press technologies.
However, Mr. Hansen admitted that this is “taking far longer than I originally expected and predicted.” For the equipment producers, diversification could be a slow process, but it seems they have little alternative but to create much more broadly-based businesses.
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.
Makers of print presses in Europe – led by the Big Three from Germany of Heidelberg, manroland and Koenig & Bauer AG (KBA) – are being forced to diversify their businesses in the region and elsewhere in the developed world in the search for new sources of revenue and profit.
One consequence of the restructuring of the printing equipment sector in the wake of the recession is that the machinery manufacturers will become even more involved in the development, production and distribution of inks. Companies whose main business is the production and sale of inks to printers using conventional processes face, as a result, even more competition in a market where profit margins are under severe pressure.
Setting Up Distribution Networks
In the distribution of inks and other consumables, the machinery makers are building up a strong position in Europe because of their networks of sales offices. Even some leading ink companies are now using equipment manufacturers as the main distributors of their products in some countries.
Late last year, Flint Group announced that it had appointed Heidelberg’s subsidiary in Finland as its exclusive distributor in the country of its sheetfed offset inks, pressroom chemicals and blankets. Flint believes it can benefit from Heidelberg’s concept of a one-stop source for a balanced portfolio of inks, pressroom chemicals, blankets and other consumables. Heidelberg already distributes Flint’s sheetfed inks in Russia.
“We have a positive relationship with Heidelberg and it is always possible that we could conclude more distribution agreements with them in the future,” said Peter Baird, Flint Group’s European marketing director for print media.
Both KBA and manroland are targeting digital printing for expansion, while Heidelberg is thought to be looking for a major partner in the field. All three also want a broader presence in packaging, extending beyond the making of equipment.
In the post-recession period, the digital sector in Europe will almost certainly be one of the fastest growing in the printing market. There is in fact a widespread belief in the sector that the whole future of printing lies in digital-based technologies.
Although there were signs last year of a strong recovery in orders in Europe for conventional printing machines, sales were still below the levels before the recession.
In the first nine months of 2010, KBA reported a 47 percent jump in orders to just over €1 billion ($1.3 billion). Sales rose by 5 percent while pre-tax losses dropped from €38 billion to €7 billion. During the third quarter, higher sales provided a pre-tax profit of €15 million, raising the prospect of the company being able to pay an annual dividend again after a two-year hiatus.
“Our efforts ( at adjusting to new market conditions) are finally reflected in the bottom line,” said Helge Hansen, KBA’s president and CEO. “However, global demand is still well below pre-crisis levels and excess capacity continues to plague press manufacturers. The result is a harsh market climate of unsatisfactory price and delivery conditions for many projects with no end in sight.
“The market for new presses in 2011 will still be significantly smaller than in 2006 and 2007,” he continued. “Burgeoning sectors such as packaging will contrast sharply with declining markets for books, catalogs and newspapers.”
In the first half of its financial year to the end of September, Heidelberg increased sales by 18 percent and orders by 33 percent to €1.4 billion. The net losses for the period dropped to €88 million from €147 million in the first half of 2009.
“The restructuring measures of recent years are paying off,” said Dirk Kaliebe, the company’s chief financial officer. “Heidelberg has a much more stable financial structure and in on track to becoming profitable.”
manroland, now owned by the private equity arm of Allianz, the German insurer, continued to incur losses in 2010. Despite forecasting a strong sales increase in 2011, Gerd Finkbeiner, the company’s chairman, does not expect manroland to return to what he calls a “satisfactory capacity” until next year. Its utilization rates for manufacturing of newspaper presses are still around 50 percent and offset machines about 60 percent.
Profitability of Services
For manroland and Heidelberg, services, including distribution of inks and other consumables, technical support and consultancy activities, offer a major opportunity for further diversification.
In the first half of its 2010-11 financial year, sales of Heidelberg’s services division rose by 15 percent to €538 million. It also recorded a €37 million operating profit while its equipment division recorded a loss of €87 million.
Its consumable business is one of its star performers in its services operation. Since the company first entered the consumables sector nine years ago, it has achieved double-digit growth in sales every year.
The company is focusing on providing quality inks by exercising increasing control over properties to enhance their performance, especially on Heidelberg’s own machines. Inks are a key part of a strategy aimed at helping printers improve their productivity through the provision of services like color management guidance and business management analysis.
“Using approved and coordinated consumables is vital, in my view, to ensure maximum quality and productivity,” said Marcel Kiessling, member of Heidelberg’s board responsible for services.
Although it continues to distribute inks under non-Heidelberg brand names, such as those of Flint, Heidelberg has been putting a lot of resources building up Saphira, the brand name for its inks, coatings and other printroom products. In collaboration with ink formulators and producers, it has introduced a Saphira range with properties like fast setting, rub resistance, high gloss and intense colors throughout the printing run. In line with its corporate strategy of environmentally responsible printing, it has developed Saphira Bio inks derived from renewable raw materials.
In the coatings segment, Heidelberg took over two years ago a high-performance coatings manufacturer, Hi-Tech Coatings of the UK and Netherlands, to give Saphira a strong position in the coatings consumables market in packaging and other printing materials. The Saphira portfolio now includes barrier coatings and customized coatings products.
manroland has now made services including inks and other consumables a core part of its operation. “A central pillar of manroland is its services sector,” said Thomas Hauser, the company’s head of corporate marketing and communications.
Its services division has three units – printcom for inks and consumables, print services for integrated services and training activities and printnet for software products and workflow management systems.
“Our objective is to provide approved inks which are made by preferred partners in ink production in Europe and other regions,” explained a manroland official. “The inks are made to our specification and if necessary, can be customized to meet the specific requirements of printers.”
The Digital Market
The strategies being followed by press makers in consumables will fit well with a big move into digital printing, where the OEM equipment manufacturers have always kept a tight grip on the development, formulation and production of inkjet inks and toners.
The manufacturers of conventional presses are emerging as attractive partners to OEMs in digital printing because of their distribution networks, expertise in consumables and services as well as strengths in engineering.
manroland and the Netherlands-based Oce Printing System, a subsidiary of Canon of Japan, announced in December an alliance in inkjet printing for the graphics arts industry. It will cover consulting, systems, services and materials, with the aim of bringing offset and digital processes closer together in applications such as books, advertising, inserts, catalogs and brochures.
“This is the first concrete step in opening up new growth opportunities for manroland and in securing a lucrative field of business for the long term,” said Mr. Finkbeiner.
manroland already has a collaboration agreement with Kodak on the development of inkjet heads and systems for newspaper printing.
“There is no conflict of interests,” said the manroland official. “With Kodak, we are developing an integrated inkjet printing systems for newspapers. The agreement with Oce is a strategic cooperation in marketing, sales and services for industrial inkjet printing as well as in the development of equipment like folders and integrated varnishing systems. Other joint developments are not excluded in the future.”
Heidelberg is rumored to be seeking a large partnership with Kodak in digital printing only six years after it sold to Kodak its share in the two companies’ Nexpress joint venture in inkjet.
As part of its restructuring after the recession, Heidelberg set up Linoprint, a drop-on demand inkjet business targeted at the needs for digital printing machines within integrated packaging lines.
Last summer, Linoprint entered into a partnership with Pelikan, a Swiss-based ink producer, for the development of inks for drop-on-demand inkjet printing.
“Combined with out Linoprint technology, (Pelikan’s) expertise enables us to develop and manufacture inks that are specifically tailored to our customers’ requirements,” said Stephan Pienz, member of Heidelberg’s board responsible for equipment.
In August, KBA split its relatively small digital printing arm KBA-Metronic AG, which supplies a large range of customized inks, into two separate entities – KBA MetroPrint AG and KBA-Metronic GmbH. The latter is concentrating on marking and coding activities with inkjet and laser technologies.
KBA wants to become a far bigger player in digital printing. It is what the company calls part of“a new, high-potential field of operation” which KBA is trying to establish alongside its existing core activities based on conventional press technologies.
However, Mr. Hansen admitted that this is “taking far longer than I originally expected and predicted.” For the equipment producers, diversification could be a slow process, but it seems they have little alternative but to create much more broadly-based businesses.
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.