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Koenig & Bauer on track to meet targets

The German press manufacturer reported an increase in revenue, earnings and order intake from last year and is on track towards achieving medium-term targets by 2021.

In 2017, Koenig & Bauer reported a revenue of €1,217.6m, up from 4.3% from the previous year. Additionally, new orders for the group rose by 10.1% to to €1,266.3m.

Koenig & Bauer attributed the growth to a strong security business, along with packaging markets for cardboard printing, metal, glass and hollow container decorating and coding. Growth in new products such as rotary and flatbed die-cutters were also credited.

“In addition to the market success of the rotary die-cutter, the sharp rise in new contracts for flatbed die-cutters over the previous year exceeded our expectations substantially,” said CEO Claus Bolza-Schünemann.

Sheetfed Presses

Order intake in the Sheetfed segment, largest segment of which is dominated by packaging printing, rose by 15.2% over the previous year (€569.7m) to €656.2m. Revenue climbed by 7.3% over 2016 (€615m) to €660.2m. EBIT increased from €31.3m in the previous year to €37.5m, with the EBIT margin widening from 5.1% to 5.7%.

The group is working intensively on further applications in packaging, digital and industrial printing to achieve additional profitable growth beyond its medium-term targets. A key area is in corrugated board printing.

“We have already started marketing the sheetfed flexo presses CorruFLEX and CorruCUT (with an integrated rotary die-cutter), both of which have been developed with a number of unique features. In early 2019 we will be installing a CorruCUT system at the pilot customer Klingele,” Bolza-Schünemann continued.

Special Segments

Growth in orders for security printing, metal and glass/hollow container decorating as well as coding boosted order intake by 16.1% to €533.7m (2016: €459.7m). Revenue grew by 5.3% from €444.3m in the previous year to €467.9m. Following a segment profit of €44.3m in the previous year, EBIT of €53.7m was recorded in 2017.

Koenig & Bauer is working to grow in its special segments, namely 2-piece can printing: “As a globally leading supplier of presses for 3-piece can printing, we want to expand our profile by entering the 2-piece can market. Presented in May 2017 with a number of important advantages for users, the newly developed CS MetalCan press for 2-piece can decorating met with strong customer interest. Following two contract signings, we are now able to commence intensive field-testing with the target of sales launch at the end of 2018,” explained Mathias Dähn, CFO.

Digital & Web

However, Digital & Web order intake and revenue fell short of the previous year, primarily due to expected further decline in orders for newspaper and commercial web presses. Segment earnings came under strain from optimisation efforts for flexible packaging printing as well as R&D expenses, resulting in an EBIT of –€4.3m, down on the previous year’s figure of €0.5m.

2018 Forecast

For 2018, management expects to achieve organic growth of around 4% in group revenue and an EBIT margin of around 7% in 2018. Koenig & Bauer forecasts a 10.1% increase in order intake and market share in all business fields because of a favourable global economy and a growing packaging and industrial printing industry.

Dähn: “A strong basis is also provided by the 8.7% rise in the order backlog to €606.2m and the progress made in the €70m EBIT increase projects by 2021. The incremental growth in the revenue share of service business to 30% and the performance improvement project in security printing should each contribute around €20m and the integrated production network and strategic purchasing each around €15m to earnings growth.”

In response to rising costs, the group will be raising the prices of our entire product range by 3.7% effective 1 April 2018 in response to rising costs.

“Our guidance for 2018 put us on track to achieving our EBIT margin target of 9% and an organic revenue growth rate of around 4% p.a. by 2021. We would expect to reach the lower edge of our EBIT guidance of between 4% and 9% in the event of more adverse conditions in the global economy and the end markets, particularly as a result of volatile security printing business,” continued Dahn.

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