“With underlying economic and political conditions still challenging, our heightened focus on the growth markets of packaging and digital printing as well as service business is paying off,” said Claus Bolza-Schünemann, KBA president and CEO. “Even more encouraging than the substantial revenue growth is the sizeable increase in earnings for the period under review underpinned by the high profit generated in the third quarter. With operating earnings (EBIT) of €39.2 million and earnings before taxes (EBT) of €34.9 million, we were able to substantially outperform the first nine months of the previous year (EBIT of €6.1 million and EBT of €2.1 million). All segments contributed to this performance with positive figures for the quarter and the first nine months.”
The increased profit generated by the Sheetfed segment particularly strengthened the group’s earnings. The Digital & Web segment also made a positive contribution to earnings in the first nine months. The group’s gross profit margin widened from 26.6% in the previous year to 30.4%. Group net profit after tax came to €32.5 million (2015: €2.4 million), equivalent to earnings per share of €1.98 (2015: €0.16). The free cash flow came to –€17 million, compared with –€27.8 million 12 months ago.
Positive Performance in All Three Segments
Against the backdrop of the economic slowdown in China and other export markets, the order intake of €429.8 million in the Sheetfed segment fell short of the previous year’s high figure (€516.4 million) in line with expectations. On the other hand, revenue rose by 17.5% over 2015 to €443.8 million. At €268.9 million at the end of September, the order backlog ensures good capacity utilization for the sheetfed offset production facilities until well into the first quarter of 2017.
Despite the drupa costs and development expense in connection with a digital sheetfed press, segment profit rose to €17.3 million (2015: €10.1 million). Order intake in the Digital & Web segment grew by 11.2% to €100 million thanks to a number of orders for web offset presses as well as further orders from HP for the inkjet web press assembled at the site in Würzburg. Revenue climbed by 74.6% to €110 million. At €60.3 million, the order backlog remained at a satisfactory level. Despite the development expenses, EBIT came to +€0.6m (2015: –€12.2m), thus achieving the targeted profit already at the end of the first nine months.
Increased business in security, metal, coding and flexible packaging caused order intake in the Special segment to climb by 29.9% to €384.3 million. Revenue rose by 22.3% to €338.2 million. With the order backlog growing by 38.1% over 2015 to €296.2 million, capacity utilization is assured until well into next year. EBIT of €27.1m was generated in the entire period under review (2015: €15.6m).
Like the entire German mechanical engineering industry, KBA is feeling the effects of the damper being placed on the global economy by international conflicts, economic and financial problems and political uncertainty. However, on the strength of the group’s favorable business performance in the first nine months and the high capacity utilization that is secured until well into spring 2017, the Executive Board has raised its full-year earnings guidance for 2016, which had previously already been corrected upwards in the first half-year report, at the end of the first nine months again. With group revenue expected to be between €1.1 billion and €1.2 billion, management now projects an EBT margin of up to 5%.