Announcing the results at a press conference, Albrecht Bolza-Schünemann, president and CEO of the parent, Koenig & Bauer AG (KBA), revealed that operating profit jumped to €33.3m, from €20.4m the previous year.
Pre-tax earnings (EBT) of €25.8m (2004: €16m) and a net profit of €18.6m (2004: €11.8m) were both on target, while earnings per share of €1.15 compared well with the prior year’s 73 cents. At the AGM on 22 June management and the supervisory board will therefore propose a dividend of 40 cents per share, up from 25 cents in 2004.
KBA’s sheetfed division, based in Radebeul near Dresden, increased sales by 14.2% to €817.6m (2004: €716.2m) and new orders by 9.7% to €829.5m (2004: €756.4m). The web and special press division in Würzburg and Frankenthal reported a 13.7% lift in sales to €803.4m (2004: €706.8m) and a 33.7% leap in new orders to €939.4m (2004: €702.7m).
Demand was brisk both for the medium- and superlarge-format sheetfed presses launched in 2004 and for the newspaper and commercial web presses that are KBA’s traditional product lines. KBA also posted a substantial increase in sales of the special presses marketed by its Swiss subsidiary, KBA-GIORI, for printing banknotes and securities. Business was buoyant in the niche markets addressed by subsidiaries Bauer+Kunzi (metal decorating), KBA-Metronic (UV offset and industrial ID systems) and in the small-format market addressed by KBA-Grafitec, a Czech subsidiary acquired in 2005.
Domestic demand picks up
Above-average sales growth enabled KBA to consolidate its position as one of the top three players in the global marketplace by expanding its share of sheetfed and commercial web offset business. Vigorous foreign demand has now been followed by renewed vigour in the domestic market, as a result of which the export level dropped to 81.9% from 85.9% the previous year. Domestic sales were 45.7% up on 2004. But the biggest market for KBA was the rest of Europe (44.3% of total sales), followed by North America (15.9%), Asia and the Pacific (15.5%) and Africa/Latin America (6.2%).
Room for improvement
Following a reorganisation in recent years the web and special press division almost tripled operating profit to €30.6m (2004: €10.8m). Although sales continued firm, the operating profit of €2.7m (2004: €9.6m) posted by the sheetfed division fell short of expectations, primarily due to ongoing pricing pressures, hikes in the cost of raw materials and energy, and the additional expense of setting up production lines for new products. In 2006 management is targeting a big improvement in earnings on sheetfed sales, which account for 50.4% of total sales. Says Albrecht Bolza-Schünemann: “Alongside innovation, which is crucial to our success in the global arena, our key objective is to boost margins to a level commensurate with our position as a major player.”
KBA’s consolidated European subsidiaries – KBA-GIORI S.A., KBA-Mödling AG, KBA-Metronic AG, KBA-Grafitec s.r.o. and Bauer+Kunzi GmbH – made a substantial contribution to group profits. However, its specialist entity for second-hand business, Holland Graphic Occasions B.V. (HGO), posted a loss which impacted on sheetfed earnings and resulted in managerial and organisational changes. The first-time consolidation at year’s end of two sales subsidiaries, KBA-France SAS and KBA (UK) Ltd, had no impact on sales and profits.
Outlook for 2006: moderate growth, higher earnings
Following brisk growth in 2005 KBA is targeting a moderate lift in Group sales and a substantial improvement in pre-tax profit in 2006. Although the volume of new orders for sheetfed presses in the first quarter of the current year was more modest than in 2005, a sizeable backlog will keep the Radebeul plant busy until well into the summer.
Additional business is expected to be drummed up at Ipex, in April, the world’s second-largest international print media trade fair.
