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Koenig & Bauer Group: Collapse in global demand impacts on balance sheet
- Sales fall 10.1% to €1,531.9m
- Order intakes shrinks 19.7% to €1,241.5m
- Substantial capacity cuts required
- Retrenchment drives up pre-tax loss to over €85m
- Sheetfed division posts heavy loss
- Web and special press division posts sizeable profit
German press manufacturer Koenig & Bauer AG (KBA) has issued preliminary figures for 2008 following the supervisory board's annual audit meeting. The move is an interim measure prompted by the postponement of the financial statements two weeks ago from 27 March to 30 April in the wake of the global economic crisis, which has impacted on the export-focused press engineering industry with unprecedented and increasing severity, necessitating a renewed realignment of group activities.
The group order intake fell to €1,241.5m, 19.7% down on the corresponding figure for 2007. Below-capacity production levels, particularly at KBA's sheetfed plants, caused a 10.1% drop in sales to €1,531.9m (2007: €1,703.7m). The volume of orders on hand at the end of the year shrank 36.7% to €501.5m.
An operating profit of more than €100m on web and special presses contrasted with a loss of over €180m in the sheetfed division. Substantial provisions for the proposed restructuring of domestic and foreign sheetfed production plants and for related inventory valuation adjustments, write-downs on bad debts and other remedial measures resulted in a one-off charge in the high double-digit millions, an operating loss of around €80m and a pre-tax loss (EBT) of more than €85m. However, the group did post a modest EBITDA profit of under €10m.
At the end of December there were 7,838 employees on the group payroll, 398 fewer than in 2007 (8,236). Further reductions will be necessary at KBA's sheetfed production plants, bringing the total down to nearer 7,000 by the end of the current year.
Given the present recessionary tendencies in the global economy and the engineering industry, the world's third-biggest press manufacturer anticipates a further drop of 20% in sales. However, barring a renewed slump in demand the scheduled restructuring, consolidation and cost-cutting initiatives should enable KBA to post a balanced result for 2009. A more detailed projection will be issued when the 2008 financial statements are disclosed on 30 April.
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