KBA’s biggest market was the rest of Europe, with 55.3% of group sales, followed by Asia and the Pacific (14.5%)... KBA's biggest market was the rest of Europe, with 55.3% of group sales, followed by Asia and the Pacific (14.5%)

In the first three months of the year German printing press manufacturer Koenig & Bauer AG (KBA) posted a 3% increase in group orders to €350.9m (2006: €340.6m). While demand was soft for big newspaper and gravure web presses, a brisk influx of orders for special presses helped boost new bookings for web and special presses by an above-average 7.3% to €180.2m from €167.9m.

The volume of incoming orders for sheetfed presses, at €170.7m, was roughly on a par with the previous year (€172.7m). Group sales of €414.2m surpassed the prior-year figure of €309.4m by a substantial 33.9%. A big increase in shipments of commercial and security presses pushed up sales of web and special presses from €146.7m to an impressive €257.6m. However, sheetfed sales of €156.6m (2006: €162.7m) were not in line with annual targets.

Shortly after one of KBA's longstanding Spanish newspaper customers, Saragossa-based Heraldo de Aragón, signed up for the first Commander CT to roll off the production line, Spanish newspaper printers attending a customer forum in Würzburg were taken to see the beta installation at the Main-Post.

A jump in shipments reduced the volume of orders on hand from €1,072.1m twelve months earlier to €885.4m. A €319.5m (2006: €321.7m) backlog of orders for sheetfed presses, which have relatively short delivery time-frames, will keep KBA's production plants in Radebeul and Dobruška (Czech Republic) busy until well into the second half of the year. The same cannot be said of KBA's web press production plants, where capacity utilisation will fall in the second half-year following slack demand for big newspaper and gravure presses, which shrank the backlog of orders for web and special presses to €565.9m (2006: €750.4m).

KBA president Albrecht Bolza-Schünemann attributes this to developments in the media market, which have caused many newspaper publishers to place new investments on hold. KBA is addressing the capacity shortfall by expanding flexitime, reassigning manufacturing tasks the group and bringing work in-house that was previously outsourced. The management board is also reassessing capacity needs in the web division based on market projections.

Export level tops 88%
While domestic sales (€48.3m) remained roughly on a par with the previous year (€50.4m), the export level rose from 83.7% in 2006 to 88.3%. KBA's biggest market was the rest of Europe, with 55.3% of group sales, followed by Asia and the Pacific (14.5%), North America (10.3%) and Africa/Latin America (8.2%).

Stable outlook for 2007
Looking ahead, KBA reaffirmed its end of quarter projections that group sales and pre-tax earnings in 2007 would be similar to last year, namely €1.7bn and €47.4m. The existing order backlog and a recent influx of new contracts means that the web and special press division is already well on the way to meeting its sales targets for 2007. The drop in plant utilisation will not hit the division's sales until next year. A steady inflow of orders for sheetfed presses indicates that sales targets will be met there, too.

Fluctuations in demand for big web presses not unusual Summing up, KBA president Albrecht Bolza-Schünemann says: “While the market for sheetfed, commercial and special presses remained firm, this positive first impression was marred by a substantial decline in the number of major web press projects put out to tender. The long production cycles for big web presses mean that there will be a substantial drop in capacity utilisation at our web press factories, and this is bound to impact on our bottom line. Also, the strength of the euro seriously impairs our ability to defend margins when bidding for contracts against US, Japanese and other Asian competitors. However, this was factored into our forecast for 2007. Fluctuations in demand such as we have experienced in the newspaper and gravure markets are by no means unusual, and have partially been offset by higher sales in niche markets. So while the situation in the print media industry is not as uniform as it may at first glance seem, in the year we celebrate our 190th anniversary we look forward with optimism to the future.”

Keywords: Publishing, press, KBA, quarter