Koenig & Bauer Issues 3Q 2015 Report

In the third quarter of 2015, the Koenig & Bauer Group (KBA) achieved the turnaround in earnings announced with continued good order intake. After nine months, EBT came to €2.1 million and the group posted a net profit of €2.4 million.
 
In the company’s current interim report the management board affirmed its outlook for 2015 again with annual group revenue of over €1 billion expected and a planned EBT margin of up to 2%.
 
At the end of September, group order intake of €859.6 million was up 28.5% and order backlog of €597.3 million was up 36.6% year-on-year although the economic climate for the engineering industry has cooled in China and other key threshold countries.
 
The group’s largest segment, sheetfed offset, was able to compensate for the somewhat slower business with China with more orders from other regions, especially the USA and Japan. Compared to 2014, all business divisions posted a double-digit rise in the volume of new orders. In spite of some postponed deliveries KBA was able to increase its quarterly revenue over the summer to €252.8 million quarter-over-quarter.
 
Nevertheless, at €679.7 million revenue for the full nine months was 14.2% down on the prior-year figure and clearly proportionally behind the annual target. The especially high-revenue fourth quarter of 2015 will contribute more strongly to achieving the press manufacturer’s sales and earnings targets with greater earnings contributions and a higher margin product mix.
 
In the summer quarter, solid order intake of €148.3 million in the Sheetfed Solutions segment exceeded the prior-year figure by 18.2% due to an encouraging volume of orders mainly from packaging printers. Over the entire reporting period, order intake rose by 33.1% year-on-year to €516.4 million.


The volume of new orders rose in the reorganiZed Digital & Web Solutions segment by 47.4% to €89.9 million compared to 2014. Given low order backlog at the start of the year, after nine months revenue in this segment of €63 million was significantly below the prior-year figure of €93.8 million. In contrast, order backlog climbed from €61.9 million the year before to €77.8 million. Higher development costs for new digital printing markets hit earnings in the third quarter. The segment posted a loss of €12.2 million for the full nine months (2014: –€12.8 million). In the fourth quarter the KBA management board expects the turnaround targeted due to higher revenues and the sizeable reduction in costs resulting from the restructuring and capacity adjustment.
 
Orders for security presses increased significantly compared to the previous year primarily drove order intake in the Special Solutions segment up 14.2% to €295.9 million. At €276.5m revenue in this segment at the end of September was around €74 million lower than in 2014. KBA also anticipates a remarkable rise here in the fourth quarter. At the end of the quarter order backlog came to €214.5 million. Earnings were dampened by lower sales and the product mix delivered. Segment profit fell to €15.6 million compared to the prior-year figure of €51.8 million, which was boosted by high-margin security press projects.
 
Group results to 30 September were €2.4 million (2014: –€2.3 million), which corresponds to earnings per share of €0.16. At –€28.6 million cash flows from operating activities were clearly below the prior-year figure of €32.9 million. The free cash flow came to –€27.8 million following €21m the year before.
 
“The optimization of our product spectrum and the organization at our sites remain ongoing,” said Claus Bolza-Schünemann, KBA’s president and CEO. “Sustainable profitability in all business fields is our highest priority for 2016, also in order to reduce the influence of cyclical and market-driven special effects in security printing on profitability further.”