Koenig & Bauer AG · XETR:SKB
Koenig & Bauer — FY2006 Earnings Presentation
56 slides from Koenig & Bauer's earnings presentation, Mar 29, 2007
Slide 1: Press Conference on Financial Statements
Press Conference on Financial Statements on 29 March 2007 at Stürtz in Würzburg ©KBA
Slide 2: Group financial statements for 2006
Group financial statements for 2006 Albrecht Bolza-Schünemann, President and CEO, Koenig & Bauer AG ©KBA
Slide 3: 2006 in brief
2006 in brief ¾ Group sales up 7.5% to new record of €1.74bn ¾ Capacity utilisation high in both divisions ¾ Pre-tax operating margin up from 1.6 to 2.7% ¾ Cost savings offset by higher prices for raw materials and higher wages ¾ Price erosion in sales markets ¾ Order intake of €1.65bn below record
Slide 4: Key figures for 2006
Key figures for 2006 Order intake Sales Order backlog 1.1. – 31.12. 1.1. – 31.12. 31.12. €m Sheetfed offset presses Web and special presses 1,800 1,741.9 1,768.9 1,649.7 (+7.5%) (-6.7%) 1,621 1,600 1,400 864.3 870.6 829.5 1,200 817.6 1,040.9 948.7 1,000 (-8.9%) 311.7 800 305.4 600 939.4 785.4 871.3
Slide 5: Shipments by region in 2006 as percentage of sales
Shipments by region in 2006 as percentage of sales ¾ KBA export level climbed to 82.7% from 81.9% in 2005 ¾ Two-thirds of all shipments went to Europe ¾ Asia and the Pacific moved up into third place ahead of North America Germany Africa/Latin America Asia/Pacific 5% 17.3% 16.4% 12% North America 49
Slide 6: Substantial improvement in earnings in 2006
Substantial improvement in earnings in 2006 2005 2006 ¾ Gross profit margin 23.6% 24.0% ¾ Operating profit €33.3m €46.2m ¾ Pre-tax profit €25.8m €47.4m Pre-tax operating margin 1.6% 2.7% ¾ Tax rate 28.3% 27.6% ¾ Net profit €18.5m €34.3m ¾ Earnings per share €1.14 €2.11 ¾ Dividend per share €0.40 €0.
Slide 7: Web and special press division 2006
Web and special press division 2006 ¾ Web presses, special presses and systems make a vital contribution to Group profits ¾ Restructuring of web press production facilities bore fruit ¾ Innovative newspaper presses with unique features Sales Operating profit €m €m 900 + 8.5% 300 750 250 871.3 600 20
Slide 8: Sheetfed offset division 2006
Sheetfed offset division 2006 ¾ Still room for improvement, despite cost-cutting initiatives ¾ Fierce price competition in markets for new and used presses ¾ Strong euro and optimisation of new high-tech products impact on profits Sales Operating profit €m €m 900 + 6.5% 300 750 870.6 250 600 200 817
Slide 9: Healthy balance sheet reflects strong substance
Healthy balance sheet reflects strong substance 2005 2006 ¾ Capital-to-assets ratio 32.1% 34.2% Income-to-equity ratio 4.1% 7.2% ¾ Ratio of equity capital to fixed assets 179.0% 184.6% ¾ Sustained reduction in trade receivables €465.6m €399.8m ¾ Net financial position €50.3m €75.2m ¾ €30m reduction
Slide 10: Solid cash flow ratios, higher liquid assets
Solid cash flow ratios, higher liquid assets 2005 2006 ¾ Cash inflows from operating activities €174.6m €90.0m ¾ Cash outflows from investing activities €27.4m €52.2m ¾ Free cash flow €147.2m €37.8m ¾ Cash outflows from financing activities €64.0m €12.6m ¾ Funds €129.0m €154.0m ©KBA Group figures as
Slide 11: Initiatives for enhancing competitiveness
Initiatives for enhancing competitiveness ¾ Intensive staff training - Group-wide 461 apprentices and trainees in key occupations - Skills drive to strengthen technical competence and methodology ¾ Productivity-enhancing investment - €52.5m invested in property, plant and equipment (2005: €37.2m) -
Slide 12: The current situation in the print media industry
The current situation in the print media industry Klaus Schmidt, Director of Marketing and Communications, KBA Group ©KBA
Slide 13: The German print market
The German print market ©KBA
Slide 14: Print sales 2005 in Germany
Print sales 2005 in Germany Werbedrucke/Kataloge Advertising/catalogues Books/maps Business forms Printed labels Magazines Calendars/cards Newspapers/freesheets Other 1.0% 11.2% 6.4% 36.6% 6.8% 11.8% 13.0% 13.2% in% ©KBA Source: bvdm
Slide 15: Major advertising media in Germany 1995 - 2006
Major advertising media in Germany 1995 - 2006 ¾ Advertising revenues grew by more than 1% on average in 2006 ¾ For 2007 the ZAW projects further growth of 1 to 2% in €bn Daily, weekly and Sunday newspapers 7 6 5.7 5 4.7 4.0 Television + radio + cinema 4.7 4 Direct mail 3.4 3 2.9 2.7 Magazines 2.7 2
Slide 16: Sales in the German print media industry
Sales in the German print media industry Change in % 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 1999 2000 2001 2002 2003 2004 2005 2006 nominal real ©KBA Source: bvdm
Slide 17: Investment in the German print media industry
Investment in the German print media industry ¾ The crisis of 2001 to 2003 had a detrimental impact on investment ¾ 2005 and 2006 saw a moderate increase in investment activities in €m 1,400 1,200 1,000 800 600 400 200 0 95 96 97 98 99 00 01 02 03 04 05 06* 07* * estimated ©KBA Source: bvdm, based o
Slide 18: The global print market
The global print market = ax LP
Slide 19: Global print market by print product sector 2006
Global print market by print product sector 2006 Total volume: US$601bn Others Books Catalogues Directories 16% 6% 5% 2% Labels 4% Magazines 10% News- papers 8% Direct mail Brochures/ 5% Packaging Inserts 30% other Financial & legal Business 2% promotional printing forms Posters print 3% 2% and bann
Slide 20: Global print market by region 2006
Global print market by region 2006 Total market: US$601bn Middle East Africa North America Australasia 0.6% 0.4% 32.9% Asia 1.6% 27.7% Eastern Europe Latin America 2.1% 5.4% Western Europe 29.3% ©KBA Source: Pira International Ltd 2006
Slide 21: Top ten global printing markets 2001 - 2006
Top ten global printing markets 2001 - 2006 (US$m) % change average Country 2001 2005 2006* 2005-2006* annual growth 2001-2006 in % United States 159,738.7 177,008.1 182,000.7 +2,8 2.6 Japan 76,617.6 87,909.3 84,451.1 -3.9 2.0 China 19,886.8 35,202.2 40,800.7 +15,9 15.5 Germany 26,895.5 38,224.9 37,
Slide 22: Internet's share of total advertising revenue
Internet's share of total advertising revenue 2001 to 2005 in selected countries in% 8 Exceptionally strong growth in online advertising from low base 7 6 5 2001 4 2005 3 2 1 0 US D NL UK J F FIN ©KBA Source: WAN - World Press Trends 2006
Slide 23: Global print market by print process 2006
Global print market by print process 2006 Total market: US$601bn Inkjet Other Sheetfed offset Electro- Letterpress 4% 2% 20% photography 2% 7% Screen 3% Flexo 20% Web offset Coldset Gravure Web offset 13% 12% Heatset 17% ©KBA Source: Pira International Ltd 2006, the world-wide market for print
Slide 24: The German engineering industry
The German engineering industry ©KBA
Slide 25: Leading exporter of printing presses worldwide
Leading exporter of printing presses worldwide Germany has a global market share of over 60%, Japan 11.8%, the UK 7% and Switzerland 6.6% in €m 5000 4661 4652 Exports 4529 4500 4068 4164 4095 4000 3814 3712 3518 3457 3500 Imports 2999 3000 2776 2717 2598 2428 2541 2500 2373 2246 2000 1500 1000 544 5
Slide 26: KBA Group Turnover by divisions
KBA Group Turnover by divisions in €m 2000 1800 Web and s pecial pres s es Sheetfed offs et pres s es 1600 1400 1200 1000 800 600 400 200 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 ©KBA Post-2001 figures as per IFRS
Slide 27: The web press market
The web press market ©KBA
Slide 28: Global market for web presses
Global market for web presses* In 2006 fewer major newspaper presses were put up for tender 1600 * excluding 1,498 Japan, flexo, 1400 packaging 1,323 1200 1,185 Order intake 1,050 Market volume in €m 1000 955 860 857 800 807 679 Sales Newspaper 600 607 Commercial Gravure 400 200 168 114 128 108 57 S
Slide 29: The newspaper market
The newspaper market ©KBA
Slide 30: Geographical distribution of newspaper presses 2002 - 2006
Geographical distribution of newspaper presses 2002 - 2006 (excluding Japan) Africa/ Latin America Middle East 1% 5% North America 22% Europe 50% Asia/Pacific 22% ¾ Cumulative market volume 2002 - 2006: €6bn ¾ Average market volume p.a.: €1.2bn ©KBA
Slide 31: Trends in the newspaper market
Trends in the newspaper market ¾ The market in Europe and North America is stagnating or shrinking E-media are growing at the expense of print Investment in bulky technology is slowing in favour of new, cross-media systems (trend in the USA) There is a shift towards merging production sites
Slide 32: Strong worldwide growth of free dailies
Strong worldwide growth of free dailies Daily circulation in thousand copies Number of titles 70000 300 265 60000 250 50000 189 200 41084 40000 132 150 30000 28142 103 84 20440 100 80 20000 17159 13831 11857 50 10000 0 0 2001 2002 2003 2004 2005 2006 ©KBA Source: WAN - World Press Trends
Slide 33: New technologies and processes to strengthen the newspaper industry
New technologies and processes to strengthen the newspaper industry Example: waterless printing with the KBA Cortina ¾ Higher level of press utilisation, value-added production ¾ Newspapers on newsprint and heatset magazines on LWC stock can be printed using the same inks (= unique feature) ¾ Automa
Slide 34: The web offset and gravure market
The web offset and gravure market ©KBA
Slide 35: Geographical distribution of commercial presses 2002 - 2006
Geographical distribution of commercial presses 2002 - 2006 (excluding Japan)* Africa/ Latin America Middle East 3.9% 3.3% Asia/Pacific 13.9% Europe 52.4% North America 26.5% ¾ Cumulative market volume 2002 - 2006: €3.8bn ¾ Average market volume p.a.: €760m ©KBA * approx. 70 presses p.a.
Slide 36: Technical advances reduce market volume in Europe
Technical advances reduce market volume in Europe Example: commercial web offset presses 160 Technical advances 140 120 Demand for commercial presses 100 Installations in Europe 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 ©KBA
Slide 37: KBA in the commercial market 2006
KBA in the commercial market 2006 ¾ Press sales grew strongly in 2006 ¾ 72-page KBA Compacta 818 press lines were shipped to Quebecor plants in Austria, the UK and Spain, and to other printers in Italy and Slovakia ¾ A double-decker KBA Compacta 217 for short-run magazines came on stream at Vogel Dr
Slide 38: Cyclical demand for gravure
Cyclical demand for gravure 20 18 Worldwide 16 Europe USA 14 Japan 12 Other New installations 10 8 6 4 2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 ©KBA Source: KBA; status: 02/2007
Slide 39: Developing new markets: Decorative gravure printing
Developing new markets Decorative gravure printing ¾ Know-how transfer from gravure to decorative printing, a high- growth application ¾ KBA decorative gravure presses set new quality and productivity benchmarks ¾ Expansion into gravure packaging, another high-growth market, is conceivable The KBA T
Slide 40: Packaging: a growth market
Packaging: a growth market ¾ Average growth of the entire packaging market 4.3% p.a. ¾ Growth in western Europe and North America approx. 2% p.a. ¾ Exceptionally strong growth in Middle East, Far East and eastern Europe ¾ KBA has established a strong position in the sheetfed offset market ©KBA
Slide 41: The sheetfed market
The sheetfed market ©KBA
Slide 42: Productivity comparison: sheetfed offset/web offset/rotogravure
4/4 output in m²/h ©KBA 0 50,000 100,000 150,000 200,000 250,000 RA 74 RA 105 RA 130 RA 142 RA 162 RA 205 C 215 C 217 C 318 C 408 C 418 C 618 C 818 TR 5B TR 6B TR 8B TR 10B TR 12B Productivity comparison Sheetfed offset/web offset/publication rotogravure
Slide 43: Sheetfed formats
Sheetfed formats* Small format: volume eroded by digital systems and technical advances Medium format: substantial growth through structural changes Large format: growth potential through automation and productivity gains 100% * sales by German manufacturers 90% 80% 70% 60% Large Gr o ß fformat or m
Slide 44: Trend: long press lines
Trend: long press lines ¾ There has been a shift to long medium-format presses since 1995 ¾ The prime applications are magazines and promotional literature ¾ Long press increasingly feature inline coating ¾ KBA has shipped several presses with as many as 15 units (printing, coating and drying) 3D-Sc
Slide 45: Trend: see – touch – smell
Trend: see – touch – smell ¾ Print must exploit its haptic and optical edge over e-media ¾ Value-added coating can help printers grow market share ¾ Other aids: designer paper, film, foil, metallic and aromatic inks etc. ¾ High-quality printed products can be effective sales tools at the point of sa
Slide 46: Trend: bigger formats
Trend: bigger formats Productivity increases with format m²/h * 35,000 27,859 30,000 25,272 25,000 21,726 20,000 17,842 13,986 15,000 10,000 6,926 5,000 0 RA 74 RA 105 RA 130 RA 142 RA 162 RA 205 * Maximum hourly output in m² ©KBA
Slide 47: Why choose a bigger format?
Why choose a bigger format? ¾ Capital investment costs do not rise in proportion ¾ Personnel expenses barely increase ¾ Makeready times approach those of smaller formats ¾ KBA is the only manufacturer to offer large-format perfecting • Almost 50 presses sold in 3 years • New target market: screen pr
Slide 48: Trend: automated pile logistics
Trend: automated pile logistics ¾ Sheetfed is adopting automation options from web ¾ Automating pile logistics for bulky substrates (cartonboard, corrugated) can deliver substantial productivity gains in high-volume production ¾ KBA offers customised configurations and systems ¾ RFID-controlled logi
Slide 49: Trend: brand protection
Trend: brand protection ¾ Nowadays virtually everything is copied (clothing, cosmetics, bags, DVDs, watches, jewellery, spare parts, drugs) ¾ Possible security features on packaging Holograms (visible and concealed) Hidden images Genetic codes Barcodes Transponders (electronic tags) ©KBA
Slide 50: Brand protection: why KBA?
Brand protection: why KBA? ¾ Almost 50% of KBA sheetfed presses print packaging ¾ KBA has specialist know-how in inline processes ¾ KBA is the global market leader in security printing (bank notes!) ¾ KBA is keen to counteract brand piracy Luxury brands need protecting House brands are hard to prote
Slide 51: China: a high-growth market
China: a high-growth market ¾ KBA has a strong position in the large-format sector and is steadily gaining ground in medium format ¾ Sales growth must be generated outside Europe ¾ China is a major market ¾ At the Print China trade fair in April 2007 KBA unveiled a new, customised model of the Rapid
Slide 52: Outlook 2007
Outlook 2007 Albrecht Bolza-Schünemann, President and CEO, Koenig & Bauer AG ©KBA
Slide 53: Outlook first quarter 2007
Outlook first quarter 2007 ¾ Order intake for sheetfed presses in January/February above prior-year level ¾ Best-selling models are medium format, but large format sales have picked up ¾ Graphispag trade fair boosted business in Spain, a major market ¾ Orders from Italian, Spanish and US newspaper p
Slide 54: Prognosis for 2007: risks
Prognosis for 2007: risks ¾ Widespread reluctance to invest in multi-unit web presses ¾ Continuing price erosion caused by overcapacity on supply side ¾ Fluctuations in plant utilisation at web press production plants (especially Frankenthal) ¾ Spiralling prices for raw materials and energy ¾ Wage n
Slide 55: Prognosis for 2007: opportunities
Prognosis for 2007: opportunities ¾ Promotion of new products to stimulate investment in newspaper sector ¾ Cost benefits from progressive transfer to Czech subsidiary of small- format sheetfed production ¾ Welcome increase in sales and earnings by KBA-Grafitec ¾ Merger of sales and service operatio
Slide 56: Koenig & Bauer AG
Koenig & Bauer AG Friedrich-Koenig-Strasse 4 97080 Würzburg Germany www.kba-print.com ©KBA