drupa costs tip KBA into the red

On the bright side he reported a large increase in demand putting an end to the three year downturn in the press manufacturing industry

The volume of incoming orders jumped approximately 33 percent to more than AUD$1,764 million (€720 million). Sales, however, at around $895 (€510m), are only slightly higher than twelve months earlier following changes in shipping and invoicing schedules.

This, coupled with extraordinary expenses relating to drupa in the second quarter, will result in a group loss being posted in the official interim report due to be issued in mid-August. The improvement in sales and earnings will work its way through to the bottom line in the second half of the year.

As already reported, group sales in 2003 fell nine percent due to a general lack of demand. Weaker sales and the cost of restructuring the web press division resulted in a group loss of $52 M (€30m) last year. Since dividends are based on the performance of the parent company, Koenig & Bauer AG, which posted a higher loss of €38.7m, the company was unable to pay a dividend for the first time since it went public in 1985.

Web division shake-up continues apace
Cost-cutting measures at KBA’s web press division continue apace. An assembly plant in Kusel was closed down at the end of last year and one in Berlin will follow at the end of this year. Excluding the 300 staff taken on with the acquisition of Metronic in 2003, the group payroll will fall to 6,975 by the end of June, very close to the figure originally envisaged.

Organisational workflows have been streamlined, hierarchy levels stripped out and the management board reduced to five by merging sheetfed and web production into a single brief. During the next few months the focus will be on finalising the implementation of a distributed manufacturing system.

Bright prospects for 2004 confirmed
Albrecht Bolza-Schünemann revealed that higher shipments in the second half of the year will lift group sales to around $2.4 billion (€1.4 billion) – the highest in KBA’s 187-year history. Although exports and margins have been hit by ongoing pressure on prices for new and used machinery, by the high cost of steel, the strong euro and wage inflation, KBA is targeting a return to profit in 2004.

The current high level of capacity utilisation driven by a flood of new orders makes this a realistic goal despite unsatisfactory prices. However, in view of the current economic and political situation he was reluctant to quote specific figures.