12 May 2021

Koenig & Bauer continuing its recovery trajectory

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The Koenig and Bauer Group (“Koenig & Bauer”) entered 2021 on a strong note, posting a 5.3 percent increase in order intake over the previous year to 347.8 million USD (€286.0m). This was particularly due to a double-digit increase in orders in the Sheetfed segment, of which around 60 percent can be attributed to the sharp growth in the more pandemic-resistant packaging printing market.

This enabled Koenig and Bauer to additionally expand its position in the market for sheetfed offset presses for packaging printing.

Dr Andreas Pleßke, CEO of Koenig and Bauer AG, explained: ‘This favorable order intake shows us that our customer’s spending reticence is beginning to dissipate in many areas. Nevertheless, some new investments are being postponed due to the uncertainty surrounding the Covid-19 pandemic. This mainly concerns digital decor and corrugated board printing as well as metal decorating, although we are still seeing noticeable interest on the part of our customers, and corrugated board printing, for example, is likely to experience a considerable boost over the next few years given the growth in e-commerce business. The end markets that we address and particularly also the structurally growing packaging printing segment, e.g., for food, cosmetics and pharmaceuticals, are fundamentally intact. In banknote printing, current market indicators such as the project pipeline and production figures point to a continuation of the robust business environment. Accordingly, we still see our proven broad product range as appropriate for achieving our goals and are convinced that we will strengthen and further expand our market position not only in the area of packaging printing.’

Group revenue was 7.8 percent down on the previous year’s figure due to the impact of Covid-19. However, the decline in revenue was less pronounced than the 13.5 percent drop in industry-wide revenue from sales of printing presses registered by industry association VDMA. Service business accounted for about 29 percent of the Group’s revenue in the first quarter of 2021 against the backdrop of the pandemic. This means that the target of 30 percent for Group service business was almost reached, albeit based on lower new press business than in the previous year.

Despite the lower Group revenue, earnings before interest and taxes (EBIT) reached 1.8 million USD (€8.9m), compared with 206 million USD (€170m) in the same quarter of the previous year. The improvement of around 9.8 million USD (€8.1m) despite the negative volume and margin effects is mainly due to the P24x efficiency program and reduced functional costs as well as the use of short-time work. As a result, the EBIT margin improved from -6.4 percent to -3.7 percent in the first quarter of 2021. Group net loss shrank from 23.2 million USD (-€19.1m) in the previous year to 14.2 million (-€11.7m)

Segments painting a mixed picture – Sheetfed with double-digit increase in order intake

The individual segments were affected to differing degrees by the fallout from the Covid-19 pandemic in the first quarter of 2021.

In the Sheetfed segment, order intake was very favorable in the first quarter of 2021 with growth in the orders for large format sheetfed offset presses and parts of the post-press range for example, rising by 20.6 percent to 234 million USD (€193.1m). More than 60 percent of the orders were attributable to the packaging printing market, which is also growing during the Covid 19 pandemic and, for example, includes folding cartons and labels. At 175.9 million USD (€145.5m), revenue remained at the previous year’s level. The order backlog grew by 23.6 percent to 461.8 million USD (€379.7m) EBIT climbed to 3.7 million USD -€3.1m (previous year: 5.6 million USD -€4.3m), translating into an EBIT margin of -2.1 percent (previous year: -2.9 percent).

Order intake in the digital and webfed segment was heavily impacted by the Covid-19 pandemic in the first quarter of 2021. Growth in flexo presses for flexible packaging was unable to make up for lower orders for web offset presses. Customers’ pandemic-related reluctance to invest in digital decor and corrugated board printing was also reflected in a 46.1 percent decline in order intake to 28.5 million USD (€23.5m). The order backlog contracted from 1.2 billion USD (€99m) to 73.7 million USD (€60.6m). At 37 million USD (€30.5m), revenue remained almost at the previous year’s low level and had a material impact on EBIT, which came to 5.2 million USD (€4.3m) previous year: 6.7m USD (€5.6m). The EBIT margin improved to -14.1 percent, compared with -17.4 percent in the previous year.

At 88.9m USD (€73.4m), order intake in the special segment was virtually unchanged over the previous year. Orders registered by banknote solutions (banknote and security printing) and Kammann (direct decoration of hollow bodies made of glass, plastic and metal) were higher. On the other hand, there was a decline in order intake at metal print (metal packaging). With respect to Coding (coding solutions for all industries), new business remained stable compared with the same quarter of the previous year. The order backlog dropped to 287.9m USD (€237.5m) in the quarter under review. Despite the 22m USD (€18.2m) decline in revenue, EBIT improved from 5.4m USD (€4.5m) to 4.7m USD (-€3.9m), with the EBIT margin reaching -5.3 percent, compared with -4.9 percent in the previous year.

Significant improvement in cash flow due reduction also in net working capital and lower net financial position against the backdrop of Covid-19

Both the cash flow from operating activities and free cash flow increased significantly over the same quarter of the previous year and compared with the end of 2020. The cash flow from operating activities came to 33.7m USD (€27.8m), while free cash flow improved to 26.8M USD (€22.1m) also due to the reduction in net working capital. Moreover, net financial debt was lowered significantly to 31.5m USD (€-26.0m) (31 March 2020: 49.3m USD (€-40.7m); 31 December 2020: 57.1m USD (€-47.1m) despite the protracted global Covid-19 pandemic. With freely available funds of more than 303m USD (€250m) and a slightly higher equity ratio of 26.0 percent as of 31 March 2021, the Group is financially well positioned.    

Kimmich added: ‘The order backlog, which has again risen by around 7 percent compared with the end of the year to more than 812m USD (€670m), provides a solid basis for the growth that we are planning for the Koenig and Bauer Group in 2021. With the efficiency measures under P24x, we have also laid important foundations for improving our profitability. In the first quarter of 2021, we were again able to successfully implement further measures, and this should already allow us to break even at the EBIT level in 2021. After the completion of the four-year efficiency program, we hope to achieve revenue of €1.3bn and an EBIT margin of at least 7 percent and to reduce net working capital to a maximum of 25 percent of annual revenue. In the first quarter of 2021, we came a further step closer to achieving this goal through active net working capital management.’


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