Sean Milmo, European Editor03.23.15
For much of the European printing sector, 2015 is likely to be another tough year, and it will likely be challenging for many of its suppliers, including ink producers.
But for many businesses, it will continue to be a period of adjustment to new market conditions, dictated mainly by the electronic media and technologies. These will offer opportunities for growth in sales and profits for a lot of companies.
It is likely to lead, however, to a shake-up in the organization of the printing industry, particularly in the development and production of inks that are becoming more sophisticated technologically. For existing ink producers, the prospects of a radical restructuring of the printing sector could be a major challenge.
To take advantage of the changes in the market, ink makers and other players in the printing sector will probably have to expand their activities through alliances and even acquisitions. Above all, they are likely to have to diversify, especially in services, which may move their businesses into areas well beyond manufacturing.
The Packaging Segment
Companies in the printing sector are striving to gain a stronger presence in growth segments of the market, such as packaging, whose sales are increasing at a rate above the industry average. Packaging is also an area where there is a lot of development of new technologies, not only in hardware and consumables like inks but also in software.
The objective behind the joint takeover in September last year of Flint Group, Europe’s leading ink producer along with Sun Chemical, was to provide funds for an expansion by the company in the printed packaging market.
The acquisition, by Goldman Sachs Merchant Banking Division and Koch Equity Development, gives the ink and plate manufacture “a much stronger capital structure and additional flexibility,” said Antoine Fady, Flint’s chief executive.
Sun Chemical, which has been setting the pace in diversification among ink producers, has been enlarging its position as a one-stop supplier of many types of packaging inks and specialist coatings, like barrier coatings, as well as back-up services.
It has been busily widening the geographical scope of Sun Branding Solutions (SBS), based in Bradford, England, which had been mainly a UK or northern European service. SBS is now an international specialist in concept-to-consumer packaging solutions with expertise in the whole procedure of introducing packaging innovations.
ALTANA, a German-based major supplier of pigments and other ink materials, took a surprise step in vertical integration in July by purchasing for €100 million ($130 million) a large minority stake in Landa Corporation of Israel. Landa is developing a technologically advanced digital printer using nano pigments, which Matthias Wolfgruber, ALTANA’s chief executive, calls “game-changing.”
Press equipment manufacturers are also seeing ink development and manufacturing as an attractive segment for investment because of its growth potential, especially in new technologies.
Heidelberger Druckmaschinen announced last year that it is planning to expand in inks and other consumables, if necessary through acquisitions, because of the growth prospects of the segment.
It launched its own range of low migration inks under the Saphira label in June, with the aim of reinforcing its role as a single source of solutions to the packaging industry by covering equipment, services, software and consumables.
The ability of some ink producers to gain higher margins in recent years for some of their added-value inks is attracting the attention of companies to the ink segment.
Meanwhile, printers are having to reduce costs in response to the weaker demand stemming from slow economic growth across much of Europe.
“Printers are investing more time in ensuring that they are making the best use of their resources,” reported Smithers Pira, a UK-based print industry consultancy, in a recent briefing on the European printing market. “Lean manufacturing techniques are being widely adopted to optimize productivity.”
Turnaround times have been speeded up, runs are much shorter and printed content is more carefully targeted. “The amount of print being produced is coming more in line with the actual amount that is required, reducing manufacturing waste and redundant copies across the supply chain,” said Smithers Pira.
Economic Growth in the EU
Against this background, ink producers are striving at least to maintain sales and profitability. Their ability to do this in 2015 has been bolstered by improved economic prospects for the European Union’s 28 member states.
For the first time since 2007, all of the countries should experience a rise in their GDPs, which should continue into 2016, according to the European Commission, the EU’s Brussels-based executive. “The right economic conditions are in place for sustained growth and job creation,” said Valdis Dombrovskis, a commission VP.
Growth this year is forecast in the EU as a whole to be 1.7%, against 1.3% in 2014. In the euro area covering 19 EU states, growth will be 1.3% compared with 0.8% last year.
The economies of countries in southern Europe whose heavy debt burdens have plunged them into recession are now recovering. Spain and Italy, whose GDPs shrank by 1% and 2% respectively two years ago, are expected this year to expand by 2.3% and 0.6%.
A sharp drop in oil prices and other raw materials last year should help ink producers increase their margins. With oil costing around half of what it was a year ago, the price of petrochemical-derived raw materials has been declining in recent months.
At the same time, there has been an 8% to 9% drop in the cost of metals and 7% in biomaterials because of cheaper agricultural products.
Low inflation last year in Europe driven by low oil and other commodity prices had by January led to overall negative inflation in the euro area.
Consumer expenditure is predicted to be boosted across much of Europe, except in non-EU states like Russia and some of its neighbors, by rock-bottom inflation combined with real rises in wages. This should trigger higher advertising expenditures, although a lot of it may be on the Internet rather than in the print media, like newspapers and magazines.
“There are definite signs that consumer expenditure in Western Europe is picking up,” said Jonathan Barnard, head of forecasting at ZenithOptimedia, a London-based international media agency. “European consumers still tend to be wary about the future. It will be a while yet before consumer confidence returns to the relatively high levels prior to the 2008 recessions. But the trends are now moving in the right direction.”
Due partly to cheaper oil and low inflation, ZenithOptimedia believes that advertising expenditure in Western Europe will go up by 3% this year, although that is below a global rise of 5%. “The European growth rate will be the highest for 10 years,” said Barnard.
The print media has a 29% share of the total Western European advertising market against 23% worldwide. But this share will decline to 24% in 2017 against 36% in 2011, says ZenithOptimedia. Nonetheless, the decrease is expected to level out in the short term in terms of advertising revenue – from a 21% fall in the three years from 2011 to 10% in the three years to 2017.
Paper Production
Paper and pulp production figures give an idea of how much in volume terms printers have had to restrict their output in recent years in the face of competition from the Internet as well as poor demand among consumers and commercial groups.
Last year, total production of paper in Europe was 10% below what it was before the 2008 financial crisis, although the decline in output has begun to stabilize.
Paper and board output went down by only 0.2% in 2014, according to figures from the Confederation of European Paper Industries (CEPI), Brussels. The production of graphic grades of paper has continued to go down more sharply than other grades. Total graphic paper output dropped by 3% while that of newsprint fell by around 7%.
However a rise in imports of paper has helped to trigger an increase in paper and board consumption of around 0.5% to 1%, CEPI estimates.
In a reflection of the overall trend in the printing sector of growth in packaging demand, consumption and output of packaging grades grew in Europe last year.
Packaging paper and board production went up by almost 2%, while that for wrapping grades rose by 5%. Volume output would have been even higher but for the “on-going trend towards light-weighting and resource efficiency,” said CEPI.
In Europe, packaging is the only major printing segment that is growing at a rate at least in line with GDP.
The publishing sector, with its dependence on newspapers, magazines and catalogs, appears to be in long-term decline, while parts of the commercial printing business are dwindling as well.
Nevertheless significant sections of the publishing, commercial as well as packaging segments are beginning to create solid platforms on which to establish a long-term future in communications in the Internet age.
Many print-media publishers in Europe are now running their own online businesses in order to attract cross-media advertising.
“A big difficulty for these publishers is that the vast majority of online advertising expenditure has been captured by the well established Internet players like Google, Microsoft, Yahoo and Facebook,” said Barnard.
“But they are able to offer something which these big companies cannot –cross-media packages of advertising for their customers,” he added.
Book publishers in Europe are one of the traditional sectors that is ahead of others in adapting to the threat from electronic rivals. They have switched to printing books on demand and are ensuring that printed books maintain a high profile among some groups, especially among young people.
In the UK, a large proportion of the best selling books last year were bought by or for young readers. This was because they were either linked to electronic media or video games, or were designed or written to appeal to the visually minded young generation.
Sales in the UK of children’s books went up by 9% to record levels in value terms, while for the first time their market share exceeded that of adult fiction. Approximately 25% of printed books in the UK were chldren’s titles, according ito Nielsen Bookscan’s Total Consumer Market.
Printed adult fiction dropped by 5.3% last year, the fifth successive year of decline. In five years the segment has slumped by almost 19%, while in the same period the children’s sector has expanded by 3.2%.
Total book sales in the country went down last year by 1.3% to £1.4 billion ($2.2 billion), but the decline since the arrival of e-books is starting to level out.
The Growth of Digital Printing
A growing proportion of printed books in the UK and elsewhere in Europe are being produced by digital processes, yet a further sign of the growing share of inkjet and electrophotographic technologies in the total printing market.
Books are among a number of segments that have benefitted from the development of inkjet systems with continuous printing processes. This has enabled the technology to extend its presence in packaging beyond labels into larger scale applications in value and volume.
It has also been starting to make bigger inroads into sectors mainly dominated by screenprinting, such as ceramics and textiles.
In fact, European manufacturers of presses, printheads and other components and inks for ceramic products have been affected by a slowdown in the Chinese construction market. Xaar plc, the UK printhead manufacturer, achieves two-thirds of its sales from the global ceramic tile market, and suffered a 11% fall in sales and 28% drop in operating profit in the first half of last year mainly because of a downturn in Chinese sales.
The growth prospects in digital ceramic, textile as well as wide format and packaging printing have prompted Investcorp, an international investment firm, to splash $326 million on the acquisition on SPG Prints Group, a Dutch-based company specializing in the manufacture of digital and screen inks and equipment.
Investcorp indicated that it could use the takeover as a platform for expansion into related markets. Carsten Hagenbucher, a principal in Investcorp’s corporate investment team in London, highlighted the appeal of SPG’s “innovative digital inks activities.”
“We (will) seek to help accelerate the company’s growth, both organically and through appropriate add-on acquisitions,” he explained. “There are many parallels to other portfolio companies in which we have invested.” One of these may be Esmalglass-Itaca Group of Spain, which produces inks, frits and glazes for ceramic tiles and other products.
Technological advances in digital presses and inks will be a prime driving force behind the continued fast growth of the process.
The most eagerly awaited arrival on the market is Landa Corporation’s Nanographic printer, which is due to undertake beta trials later this year. Its proprietary ink consists of billions of microscopic water-based droplets with pigment particles only tens of nanometers in size. The water evaporates as the droplets land on a heated blanket conveyor belt to form an ultra-thin dry polymeric film of 500 nanometers thickness, less than half that of offset images. In addition, the machine uses less energy to dry the ink and generates less waste.
Smithers Pira predicts that by 2018, the share of digital will have doubled in 10 years to around 20%, although sales of all printing equipment will have gone up by only an annual average of 0.2%.
Within the digital sector, inkjet will be gaining sales at a faster rate than electrophotographic printing, although the latter will still have the segment’s biggest share. In the five years 2013-2018, inkjet printing output will have gone up by two-thirds overall to €13.7 billion, while that electrophotography will have risen by only 23% to close to €20 billion, Smithers Pira reports.
The thriving digital printing sector is offering Koenig & Bauer (KBA) and Heidelberg, the two German-based international leaders in the manufacture of conventional printing presses, a means of recovery from financial distress resulting from a slump in sales of web and sheetfed offset machines.
Sales of large web offset presses have fallen to such a low level that they have become a “niche market” in volume terms, according to Christoph Mueller, KBA’s executive VP for web presses.
The company’s strategy is to concentrate on the growth markets of packaging, digital printing and coding and specialists segments such as banknote printing and metal decorating. “We aim to secure our strong position in these fields and expand on it further,” said Claus Bolza-Schuenemann, KBA’s president and chief executive.
In the first nine months of last year, KBA’s sales rose 8.5% of €792 million while it recorded a pre-tax profit of €1.2 million, against a loss of €18 million in the same period in the previous year.
Heidelberg has been extending its digital activities through collaborations with Ricoh and Fujifilm of Japan and the full acquisition of Gallus Holding, a Swiss specialist in digital printing of labels and folding boxes. It is also planning to move into entirely new technologies like customized printing on 3D printed objects.
Digital printing and consumables like inks have been pinpointed by Heidelberg as its main targets for growth.
In February this year it reported operating profit almost tripling to €29 million in the first nine months of its financial year, although it registered a post-tax loss of €95 million, double that of the previous year. Sales dropped by 9% to €1.7 billion. “In operational terms we are on course to achieve our annual targets with a strong final quarter,” said Dirk Kaliebe, Heidelberg’s CFO.
Currently a combination of involvement in both digital printing and packaging seem to be for printing companies the strongest basis for success.
Digital’s advance in packaging seems likely to continue as the result of the introduction of processes for the continuous-feed color inkjet printing. This will enable digital to achieve higher volumes and speeds on a variety of papers.
The development of coding systems on packaging is making them a tool for linking the package with promotional and other information, which, through augmented reality (AR) software, can be accessed by smart phones and tablets.
European Union regulators are also now making obligatory the high-resolution printing of codes on packaging for tracing pharmaceuticals. The changes that could be extended to other products like certain foods and feeds will require major improvements in the quality of coding inks, mainly in terms of resolution and stability.
The new EU legislation – the Falsified Medicines Directive introduced to combat counterfeiting of medicines – is necessitating the creation of a pan-European IT infrastructure. This will enable pharmacists to authenticate a drug when dispensing it by checking information from barcode scanners against data held in central databases.
The quality of the printing and the inks will be crucial to the efficiency of the system. It highlights how much in the age of the Internet and mobile communications printing will still be underpinning the effectiveness of the electronic media. This is particularly the case in areas like product identification but also, with the growing application of AR, advertising and promotion.
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.
But for many businesses, it will continue to be a period of adjustment to new market conditions, dictated mainly by the electronic media and technologies. These will offer opportunities for growth in sales and profits for a lot of companies.
It is likely to lead, however, to a shake-up in the organization of the printing industry, particularly in the development and production of inks that are becoming more sophisticated technologically. For existing ink producers, the prospects of a radical restructuring of the printing sector could be a major challenge.
To take advantage of the changes in the market, ink makers and other players in the printing sector will probably have to expand their activities through alliances and even acquisitions. Above all, they are likely to have to diversify, especially in services, which may move their businesses into areas well beyond manufacturing.
The Packaging Segment
Companies in the printing sector are striving to gain a stronger presence in growth segments of the market, such as packaging, whose sales are increasing at a rate above the industry average. Packaging is also an area where there is a lot of development of new technologies, not only in hardware and consumables like inks but also in software.
The objective behind the joint takeover in September last year of Flint Group, Europe’s leading ink producer along with Sun Chemical, was to provide funds for an expansion by the company in the printed packaging market.
The acquisition, by Goldman Sachs Merchant Banking Division and Koch Equity Development, gives the ink and plate manufacture “a much stronger capital structure and additional flexibility,” said Antoine Fady, Flint’s chief executive.
Sun Chemical, which has been setting the pace in diversification among ink producers, has been enlarging its position as a one-stop supplier of many types of packaging inks and specialist coatings, like barrier coatings, as well as back-up services.
It has been busily widening the geographical scope of Sun Branding Solutions (SBS), based in Bradford, England, which had been mainly a UK or northern European service. SBS is now an international specialist in concept-to-consumer packaging solutions with expertise in the whole procedure of introducing packaging innovations.
ALTANA, a German-based major supplier of pigments and other ink materials, took a surprise step in vertical integration in July by purchasing for €100 million ($130 million) a large minority stake in Landa Corporation of Israel. Landa is developing a technologically advanced digital printer using nano pigments, which Matthias Wolfgruber, ALTANA’s chief executive, calls “game-changing.”
Press equipment manufacturers are also seeing ink development and manufacturing as an attractive segment for investment because of its growth potential, especially in new technologies.
Heidelberger Druckmaschinen announced last year that it is planning to expand in inks and other consumables, if necessary through acquisitions, because of the growth prospects of the segment.
It launched its own range of low migration inks under the Saphira label in June, with the aim of reinforcing its role as a single source of solutions to the packaging industry by covering equipment, services, software and consumables.
The ability of some ink producers to gain higher margins in recent years for some of their added-value inks is attracting the attention of companies to the ink segment.
Meanwhile, printers are having to reduce costs in response to the weaker demand stemming from slow economic growth across much of Europe.
“Printers are investing more time in ensuring that they are making the best use of their resources,” reported Smithers Pira, a UK-based print industry consultancy, in a recent briefing on the European printing market. “Lean manufacturing techniques are being widely adopted to optimize productivity.”
Turnaround times have been speeded up, runs are much shorter and printed content is more carefully targeted. “The amount of print being produced is coming more in line with the actual amount that is required, reducing manufacturing waste and redundant copies across the supply chain,” said Smithers Pira.
Economic Growth in the EU
Against this background, ink producers are striving at least to maintain sales and profitability. Their ability to do this in 2015 has been bolstered by improved economic prospects for the European Union’s 28 member states.
For the first time since 2007, all of the countries should experience a rise in their GDPs, which should continue into 2016, according to the European Commission, the EU’s Brussels-based executive. “The right economic conditions are in place for sustained growth and job creation,” said Valdis Dombrovskis, a commission VP.
Growth this year is forecast in the EU as a whole to be 1.7%, against 1.3% in 2014. In the euro area covering 19 EU states, growth will be 1.3% compared with 0.8% last year.
The economies of countries in southern Europe whose heavy debt burdens have plunged them into recession are now recovering. Spain and Italy, whose GDPs shrank by 1% and 2% respectively two years ago, are expected this year to expand by 2.3% and 0.6%.
A sharp drop in oil prices and other raw materials last year should help ink producers increase their margins. With oil costing around half of what it was a year ago, the price of petrochemical-derived raw materials has been declining in recent months.
At the same time, there has been an 8% to 9% drop in the cost of metals and 7% in biomaterials because of cheaper agricultural products.
Low inflation last year in Europe driven by low oil and other commodity prices had by January led to overall negative inflation in the euro area.
Consumer expenditure is predicted to be boosted across much of Europe, except in non-EU states like Russia and some of its neighbors, by rock-bottom inflation combined with real rises in wages. This should trigger higher advertising expenditures, although a lot of it may be on the Internet rather than in the print media, like newspapers and magazines.
“There are definite signs that consumer expenditure in Western Europe is picking up,” said Jonathan Barnard, head of forecasting at ZenithOptimedia, a London-based international media agency. “European consumers still tend to be wary about the future. It will be a while yet before consumer confidence returns to the relatively high levels prior to the 2008 recessions. But the trends are now moving in the right direction.”
Due partly to cheaper oil and low inflation, ZenithOptimedia believes that advertising expenditure in Western Europe will go up by 3% this year, although that is below a global rise of 5%. “The European growth rate will be the highest for 10 years,” said Barnard.
The print media has a 29% share of the total Western European advertising market against 23% worldwide. But this share will decline to 24% in 2017 against 36% in 2011, says ZenithOptimedia. Nonetheless, the decrease is expected to level out in the short term in terms of advertising revenue – from a 21% fall in the three years from 2011 to 10% in the three years to 2017.
Paper Production
Paper and pulp production figures give an idea of how much in volume terms printers have had to restrict their output in recent years in the face of competition from the Internet as well as poor demand among consumers and commercial groups.
Last year, total production of paper in Europe was 10% below what it was before the 2008 financial crisis, although the decline in output has begun to stabilize.
Paper and board output went down by only 0.2% in 2014, according to figures from the Confederation of European Paper Industries (CEPI), Brussels. The production of graphic grades of paper has continued to go down more sharply than other grades. Total graphic paper output dropped by 3% while that of newsprint fell by around 7%.
However a rise in imports of paper has helped to trigger an increase in paper and board consumption of around 0.5% to 1%, CEPI estimates.
In a reflection of the overall trend in the printing sector of growth in packaging demand, consumption and output of packaging grades grew in Europe last year.
Packaging paper and board production went up by almost 2%, while that for wrapping grades rose by 5%. Volume output would have been even higher but for the “on-going trend towards light-weighting and resource efficiency,” said CEPI.
In Europe, packaging is the only major printing segment that is growing at a rate at least in line with GDP.
The publishing sector, with its dependence on newspapers, magazines and catalogs, appears to be in long-term decline, while parts of the commercial printing business are dwindling as well.
Nevertheless significant sections of the publishing, commercial as well as packaging segments are beginning to create solid platforms on which to establish a long-term future in communications in the Internet age.
Many print-media publishers in Europe are now running their own online businesses in order to attract cross-media advertising.
“A big difficulty for these publishers is that the vast majority of online advertising expenditure has been captured by the well established Internet players like Google, Microsoft, Yahoo and Facebook,” said Barnard.
“But they are able to offer something which these big companies cannot –cross-media packages of advertising for their customers,” he added.
Book publishers in Europe are one of the traditional sectors that is ahead of others in adapting to the threat from electronic rivals. They have switched to printing books on demand and are ensuring that printed books maintain a high profile among some groups, especially among young people.
In the UK, a large proportion of the best selling books last year were bought by or for young readers. This was because they were either linked to electronic media or video games, or were designed or written to appeal to the visually minded young generation.
Sales in the UK of children’s books went up by 9% to record levels in value terms, while for the first time their market share exceeded that of adult fiction. Approximately 25% of printed books in the UK were chldren’s titles, according ito Nielsen Bookscan’s Total Consumer Market.
Printed adult fiction dropped by 5.3% last year, the fifth successive year of decline. In five years the segment has slumped by almost 19%, while in the same period the children’s sector has expanded by 3.2%.
Total book sales in the country went down last year by 1.3% to £1.4 billion ($2.2 billion), but the decline since the arrival of e-books is starting to level out.
A growing proportion of printed books in the UK and elsewhere in Europe are being produced by digital processes – yet a further sign of the growing share of inkjet and electrophotographic technologies in the total printing market.
Books are among a number of segments that have benefitted from the development of inkjet systems with continuous printing processes. This has enabled the technology to extend its presence in packaging beyond labels into bigger scale applications in value and volume.
It has also been starting to make bigger inroads into sectors, mainly dominated by screen printing, such as ceramics and textiles.
In fact European manufacturers of presses, printheads and other components and inks for ceramic products have been affected by a slowdown in the Chinese construction market. Xaar plc, the UK printhead manufacturer which achieves two-thirds of its sales from the global ceramic tile market, suffered a 11% fall in sales and 28% drop in operating profit in the first half of last year mainly because of a downturn in Chinese sales.
Nonetheless the growth prospects in digital ceramic, textile as well as wide format and packaging printing have prompted Investcorp, an international investment firm to splash $326 million on the acquisition on SPG Prints Group, a Dutch-based company specializing in the manufacture of digital and screen inks and equipment.
Investcorp indicated that it could use the takeover as a platform for expansion into related markets. Carsten Hagenbucher, a principal in Investcorp’s corporate investment team in London, highlighted the appeal of SPG’s “innovative digital inks activities”.
“We (will) seek to help accelerate the company’s growth, both organically and through appropriate add-on acquisitions,” he explained. “There are many parallels to other portfolio companies in which we have invested.” One of these may be Esmalglass-Itaca Group of Spain, which produces inks, frits and glazes for ceramic tiles and other products.
The Growth of Digital Printing
A growing proportion of printed books in the UK and elsewhere in Europe are being produced by digital processes, yet a further sign of the growing share of inkjet and electrophotographic technologies in the total printing market.
Books are among a number of segments that have benefitted from the development of inkjet systems with continuous printing processes. This has enabled the technology to extend its presence in packaging beyond labels into larger scale applications in value and volume.
It has also been starting to make bigger inroads into sectors mainly dominated by screenprinting, such as ceramics and textiles.
In fact, European manufacturers of presses, printheads and other components and inks for ceramic products have been affected by a slowdown in the Chinese construction market. Xaar plc, the UK printhead manufacturer, achieves two-thirds of its sales from the global ceramic tile market, and suffered a 11% fall in sales and 28% drop in operating profit in the first half of last year mainly because of a downturn in Chinese sales.
The growth prospects in digital ceramic, textile as well as wide format and packaging printing have prompted Investcorp, an international investment firm, to splash $326 million on the acquisition on SPG Prints Group, a Dutch-based company specializing in the manufacture of digital and screen inks and equipment.
Investcorp indicated that it could use the takeover as a platform for expansion into related markets. Carsten Hagenbucher, a principal in Investcorp’s corporate investment team in London, highlighted the appeal of SPG’s “innovative digital inks activities.”
“We (will) seek to help accelerate the company’s growth, both organically and through appropriate add-on acquisitions,” he explained. “There are many parallels to other portfolio companies in which we have invested.” One of these may be Esmalglass-Itaca Group of Spain, which produces inks, frits and glazes for ceramic tiles and other products.
Technological advances in digital presses and inks will be a prime driving force behind the continued fast growth of the process.
The most eagerly awaited arrival on the market is Landa Corporation’s Nanographic printer, which is due to undertake beta trials later this year. Its proprietary ink consists of billions of microscopic water-based droplets with pigment particles only tens of nanometers in size. The water evaporates as the droplets land on a heated blanket conveyor belt to form an ultra-thin dry polymeric film of 500 nanometers thickness, less than half that of offset images. In addition, the machine uses less energy to dry the ink and generates less waste.
Smithers Pira predicts that by 2018, the share of digital will have doubled in 10 years to around 20%, although sales of all printing equipment will have gone up by only an annual average of 0.2%.
Within the digital sector, inkjet will be gaining sales at a faster rate than electrophotographic printing, although the latter will still have the segment’s biggest share. In the five years 2013-2018, inkjet printing output will have gone up by two-thirds overall to €13.7 billion, while that electrophotography will have risen by only 23% to close to €20 billion, Smithers Pira reports.
The thriving digital printing sector is offering Koenig & Bauer (KBA) and Heidelberg, the two German-based international leaders in the manufacture of conventional printing presses, a means of recovery from financial distress resulting from a slump in sales of web and sheetfed offset machines.
Sales of large web offset presses have fallen to such a low level that they have become a “niche market” in volume terms, according to Christoph Mueller, KBA’s executive VP for web presses.
The company’s strategy is to concentrate on the growth markets of packaging, digital printing and coding and specialists segments such as banknote printing and metal decorating. “We aim to secure our strong position in these fields and expand on it further,” said Claus Bolza-Schuenemann, KBA’s president and chief executive.
In the first nine months of last year, KBA’s sales rose 8.5% of €792 million while it recorded a pre-tax profit of €1.2 million, against a loss of €18 million in the same period in the previous year.
Heidelberg has been extending its digital activities through collaborations with Ricoh and Fujifilm of Japan and the full acquisition of Gallus Holding, a Swiss specialist in digital printing of labels and folding boxes. It is also planning to move into entirely new technologies like customized printing on 3D printed objects.
Digital printing and consumables like inks have been pinpointed by Heidelberg as its main targets for growth.
In February this year it reported operating profit almost tripling to €29 million in the first nine months of its financial year, although it registered a post-tax loss of €95 million, double that of the previous year. Sales dropped by 9% to €1.7 billion. “In operational terms we are on course to achieve our annual targets with a strong final quarter,” said Dirk Kaliebe, Heidelberg’s CFO.
Currently a combination of involvement in both digital printing and packaging seem to be for printing companies the strongest basis for success.
Digital’s advance in packaging seems likely to continue as the result of the introduction of processes for the continuous-feed color inkjet printing. This will enable digital to achieve higher volumes and speeds on a variety of papers.
The development of coding systems on packaging is making them a tool for linking the package with promotional and other information, which, through augmented reality (AR) software, can be accessed by smart phones and tablets.
European Union regulators are also now making obligatory the high-resolution printing of codes on packaging for tracing pharmaceuticals. The changes that could be extended to other products like certain foods and feeds will require major improvements in the quality of coding inks, mainly in terms of resolution and stability.
The new EU legislation – the Falsified Medicines Directive introduced to combat counterfeiting of medicines – is necessitating the creation of a pan-European IT infrastructure. This will enable pharmacists to authenticate a drug when dispensing it by checking information from barcode scanners against data held in central databases.
The quality of the printing and the inks will be crucial to the efficiency of the system. It highlights how much in the age of the Internet and mobile communications printing will still be underpinning the effectiveness of the electronic media. This is particularly the case in areas like product identification but also, with the growing application of AR, advertising and promotion.
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.
