Koenig & Bauer on a Growth and Profitability Trajectory in 2016

Backed by a significant increase in revenue and profit, the Koenig & Bauer (KBA) group largely achieved or even exceeded the medium-term targets that it had issued at the beginning of 2015 with unprecedented high margins in 2016.
 
“The profitable growth was generated in existing and new packaging markets, from industrial applications in digital web printing and the continued expansion of service business – despite the absence of any macroeconomic support,” said CEO Claus Bolza-Schünemann.
 
“With all segments operating profitably, we were able to achieve a further goal,” added CFO Dr Mathias Dähn. “After a decade of declining revenue and unsatisfactory margins, we want our shareholders to receive a fair portion of this success. Accordingly, the management board and the supervisory board will be asking the shareholders to approve a dividend of €0.50 per share at the annual general meeting on 23 May 2017.”
 
Despite persistently challenging global economic and political conditions, the group recorded robust order intake of €1,149.7 million, only slightly shy of the previous year’s figure (€1,182.7 million). At €557.5 million, the order backlog at the end of 2016 remained at a high level (2015: €574.9 million). With the revenue structure continuing to shift in favor of the markets of the future, group revenue came to €1,167.1 million, 13.9% up on the previous year’s figure of €1,025.1 million.
 
Increased revenue accompanied by improved margins, consistently high capacity utilization and the sustained reduction of the cost base following the successful completion of restructuring underpinned the increase in profit, which reached the highest level in the company’s 199-year history. Adjusted for non-recurring income, EBIT and EBT climbed to €62.9 million and €56.8 million, respectively. At 4.9%, the EBT margin guidance of up to 5% was achieved in full. Group net profit rose more than three-fold to €82.2 million (2015: €26.9 million), equivalent to earnings per share of €4.98 (2015: €1.62).
 
The Sheetfed segment widened its share of the global market to approximately 25% for sheetfed offset presses and to substantially more than 60% for large-format presses.
 
Due to the growth in the packaging market and substantial market share gains, the Sheetfed segment posted a 9.5% increase in revenue to €615 million. Despite high fair and development expenses, EBIT climbed from €25.5 million to €31.3 million.
 
Driven by growth in service business and in new digital printing applications, Digital & Web performed well, becoming profitable with EBIT of €1.9 million despite the strain caused by development expenses. With order intake up 28% to €150.8 million, revenue rose by 59% to €156.5 million. Koenig & Bauer expects the partnership with HP in the corrugated packaging sector and its own RotaJET series to make a growing contribution to its digital printing business.
 
The favorable performance of packaging printing solutions caused order intake to climb to €491.4 million (2015: €477.7 million). In a competitive environment, KBA was able to maintain its leading international position in security printing with a market share of more than 80%. Revenue grew by 11.6% from €422.9 million in the previous year to €472 million. Segment profit came to €42.8 million, up from €27.7 million in 2015.
 
The substantial increase in free cash flow from –€23.7 million in the previous year to €2.3 million contributed to a rise in liquidity to €202 million (31 December 2015: €186.3 million).
 
“Despite the persistently challenging conditions in the global economy particularly in the light of recent political developments, we are facing 2017, the year of our company’s 200th anniversary, with confidence,” said Bolza-Schünemann. “Should conditions for our global business not significantly deteriorate, we target an organic growth of up to €1.25 billion in group revenue and an EBIT margin of around 6% in 2017.”
 
The KBA management board wants to increase group revenue organically by around 4% per year until 2021. More than half of this growth will be generated in packaging printing.