At €1.23bn, down from €1.35bn in 2002, group sales were just nine per cent below the previous year’s record level. Despite the slide in the euro dollar, sales of sheetfed offset presses stood at €617.5m, roughly on a par with the previous year €619m. These contrasted with a 16.4 per cent drop in web press sales to €614.3m, down from €734.8m in 2002.
The group order backlog on the balance sheet date of 31 December totalled €856.9m, compared to €832.9m in 2002, a 2.9 per cent increase on the previous year. Although the volume of orders on hand for sheetfed offset presses swelled by 19.4 per cent, a drop in new orders for security presses caused the order level for web and special presses to shrink by 2.9 per cent to €597.3m.
According to KBA, the level of plant utilisation at its newspaper, commercial and gravure facilities in west Germany has improved substantially since summer 2003 and is now much higher than in the previous year, when short-time work was introduced on a prolonged but temporary basis.
In 2003 the KBA group posted a loss for the first time since acquiring Planeta in 1993. The main causes were the slump in web press sales, currency losses in North America caused by the massive devaluation of the dollar relative to the euro, intense pricing pressures in the market and the heavy costs incurred in downsizing capacity at the group’s web press production plants.
A €1.9m operating loss and a one-off expense of €45.1m from the closure of two minor assembly plants and redundancies at the main factories in Würzburg and Frankenthal resulted in negative earnings before interest and taxes (EBIT) of €46.1m (2002: +€46.3m) and a €49.6m loss from ordinary activities. After factoring in deferred taxes the KBA group posted a net loss of €30m for 2003 (2002: net profit of €28.1m). Earnings per share of €1.75 for 2002 were transformed into a €1.86 loss for 2003.
Segmental results for the KBA group reveal a sharp contrast in the performance of its two divisions. Whereas the sheetfed offset division posted an operating profit of €19.9m, its web and special press division returned a loss of €66.9m (2002: €29.2m profit) as a result of the high one-off restructuring expense and severe pricing pressures in the market.
The financial statements for the parent company, Koenig & Bauer AG showed a net loss of €39.6m (2002: €17.9m profit). So at the AGM on June 24 in Würzburg the management and supervisory boards will announce the cancellation of a dividend payment for the first time since the company went public in 1985.
At €45.3m, total group investment in intangible assets, property, plant and equipment was significantly lower than depreciation at €57.2m. Investment activities focused on rationalising production and enhancing core competences.
Downsizing the web press facilities reduced the group payroll by 337 in the course of the year to 7054 from 7391 in 2002 and a further reduction is planned in 2004.
Three years of economic stagnation in Germany pushed up the export level to a record high of 87.4 per cent (2002: 81.1 per cent). 46.7 per cent of group sales were generated in the rest of Europe, 16.4 per cent in North America and 19 per cent in Asia and Australia. China is fast becoming the biggest market for KBA products in the Far East.
Despite a lacklustre economy, geopolitical instability and the pressure on prices caused by the slide of the US dollar against the euro and the Japanese yen, KBA is confident that brisker sales of web presses and the higher volume of orders on hand in the early months of the current year will help to boost group sales in 2004, while new products slated for launching at drupa will generate more sales in the short-term sheetfed market in the second half of the year. The group is targeting a return to profitability for 2004, but is unable to estimate the size of potential profits until the summer.
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