Koenig & Bauer AG · XETR:SKB
Koenig & Bauer — FY2005 Earnings Presentation
46 slides from Koenig & Bauer's earnings presentation, Mar 30, 2006
Slide 1: KBA Financial Press Conference on 30 March 2006
KBA Financial Press Conference on 30 March 2006 at Pressehaus Stuttgart KBA
Slide 2: Programme
Programme ! Opening address Albrecht Bolza-Schünemann, President and CEO, Koenig & Bauer AG ! Group financial statements for 2005 Albrecht Bolza-Schünemann ! Current status and trends in the print media industry Klaus Schmidt, Director Corporate Communications, KBA Group ! Outlook Albrecht Bolza-Sch
Slide 3: Group Financial Statements for 2005
Group Financial Statements for 2005 Albrecht Bolza-Schünemann, President and CEO, Koenig & Bauer AG KBA
Slide 4: Group business operations (IFRS)
Group business operations (IFRS) Order intake Sales Order backlog 1.1. – 31.12. 1.1. – 31.12. 31.12. Sheetfed offset presses €m 1,768.9 Web and special presses 1,800 (+21.2%) 1,621.0 (+13.9%) 1,600 1,459.1 1,423.0 1,400 829.5 1,200 817.6 1,040.9 756.4 716.2 (+16.6%) 1,000 893.0 311.7 800 299.8 600 9
Slide 5: Group income statement (IFRS) Jan-Dec
Group income statement (IFRS) Jan-Dec " Substantial improvement in profits in 2005 Web Sheetfed Group in €m 2004 2005 2004 2005 2004 2005 Revenue 706.8 803.4 716.2 817.6 1,423.0 1,621.0 Cost of sales - - - - -1,088.0 -1,239.0 Gross profit - - - - 335.0 382.0 Research and development costs - - - - -5
Slide 6: Group balance sheet (IFRS) to 31.12.
Group balance sheet (IFRS) to 31.12. " Healthy balance sheet with equity ratio of 32.2 % Assets (in €m) Dec 2004 Dec 2005 Equity and liabilities (in €m) Dec 2004 Dec 2005 Non-current assets Equity Intangible assets 22.4 20.0 Share capital 42.2 42.3 Property, plant and equipment 253.1 250.3 Share pre
Slide 7: Group cash flow (IFRS) Jan-Dec
Group cash flow (IFRS) Jan - Dec " Surge in cash flow reduces bank loans in €m 2004 2005 Earnings before taxes 16.0 25.8 Depreciation on intangible assets, property, plant and equipment 45.5 40.5 Changes in provisions -9.7 -22.1 Changes in inventories, receivables and other assets -50.5 60.3 Changes
Slide 8: Group business operations (IFRS) additional figures
Group business operations (IFRS) Additional figures ! Investments €39.5m (previous year: €57.6m) ! Depreciations €40.8m (previous year: €45.5m) ! Payroll at 31.12. 7,9621 (previous year: 7,398) 1 incl. 428 KBA-Grafitec, 44 KBA (UK) and 35 KBA-France, 487 apprentices/students ! Dividend per share 40
Slide 9: Geographical breakdown of Group shipments
Geographical breakdown of Group shipments " KBA export level in 2005 remained high at 81.9% Africa/Latin America Germany 6.2 % Asia/Pacific 18.1 % 15.5 % 15.9 % USA/ 44.3 % Canada Rest of Europe 2005 KBA
Slide 10: Current Status and Trends in the Print Media Industry
Current Status and Trends in the Print Media Industry Klaus Schmidt, Director Corporate Communications, KBA KBA
Slide 11: Trends in the print media industry
Trends in the print media industry ! Print will continue to grow, at a rate of 3 - 5% p.a. ! The main growth centres will not be in mature economies (western Europe, USA, Japan etc.), but in high-population emerging economies (e.g. China, Brazil, India) ! Demographic trends and existing output level
Slide 12: Global communications market 2004
Global communications market 2004 €1,870bn in total* Internet Radio TV €100bn €35bn Other 7% €185bn Newspapers 15% Magazines 15% Print €500bn Commercials 36% Packaging 27% Telecommunications €1,050bn KBA *projected
Slide 13: Annual per capita print consumption in €
Annual per capita print consumption in € Japan 423 North America 294 Western Europe 227 Pacific 170 27 Latin America 16 Middle East • Partial saturation in mature markets 13 • Huge growth potential in emerging economies Eastern Europe 6 Asia (excl. Japan) 4 Africa 0 50 100 150 200 250 300 350 400 45
Slide 14: Printing today: German industrial production index
Printing today German industrial production index 120 Print volume depends largely on Printing industry General industry economic development 100 80 60 40 20 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 KBA Source: BVDM
Slide 15: Printing today: German print industry payrolls
Printing today German print industry payrolls, by company size 1998 2004 70,000 The print media industry is in a state of transition 60,000 50,000 40,000 30,000 20,000 10,000 0 1-9 10 - 19 20 - 49 50 - 99 100 - 499 500 - 999 > 1,000 KBA Source: BVDM
Slide 16: Printing today: German print production 2004
Printing today German print production 2004 6.8% 6.6% 11.7% 12.1% 13.0% 13.5% 36.3% Promotional literature / catalogues Corporate literature Magazines Newspapers / advertising journals Books / maps Printed labels Other print products KBA Source: BVDM
Slide 17: Changes in advertising
Changes in advertising Advertising revenues in Germany (€ bn) 30 25 20 15 Ad revenues 2005: + 1-2% (preliminary 10 figures) 5 0 1989 1994 1999 2004 Publications Promotional prints / posters Electronic media KBA Source: BVDM
Slide 18: German advertising market
German advertising market ! Above-average growth rate of 7.3% p.a. for the electronic and audio-visual media ! Advertising by way of catalogues, posters and other advertising print increased by 4.3% p.a. over the period 1989-2004 ! Advertising revenue for publications developed at a below- average r
Slide 19: Changes in advertising: media market share
Changes in advertising Advertising expenditure in Germany: media market share in €bn 30 2001 2004 Newspapers 25 TV 20 Magazines 15 Other media Mailshots Frees 10 Radio Online 5 0 KBA Source: BVDM
Slide 20: Advertising expenditure in the print media
Changes in advertising Advertising expenditure in the print media 4 Germany EU 2 0 -2 -4 -6 2006: one-off boost in Germany -8 from World Cup -10 -12 2001 2002 2003 2004 2005 2006 (projected) KBA Source: European Advertising & Media Forecast
Slide 21: Critical factors impacting on the print market
Trends in print production Critical factors impacting on the print market 58% Pricing pressures Economic fluctuations 50% 49% Shorter turnaround times Diminishing run lengths 46% Excess production capacity 38% 35% Competition from internet, other media Customer consolidation 20% 0% 10% 20% 30% 40% 5
Slide 22: Trends in print production
Trends in print production ! Digital printing is capturing the market for time-sensitive, ultra- short print runs ! Digital printing primarily threatens small-format offset ! The professional print market is being eroded by home printing ! Office printers are being used increasingly for flyers, broc
Slide 23: Print output by process 2005
Trends in print production Print output by process 2005 31% 4% 65% Digital print Offset Others Conclusion: Offset is the dominant printing process. Digital printing is growing rapidly from a relatively low base. KBA Source: PROGNOS
Slide 24: Print output by process 2015
Trends in print production Print output by process 2015 Digital print will erode the offset market. However, offset will profit from an increase in total market volume and experience absolute growth 30% 10% 60% Digital print Offset Others KBA Source: PROGNOS
Slide 25: Economic markets for digital and conventional printing processes
Trends in the printing press market Economic markets for digital and conventional printing processes with reference to quality and run lengths Quality high Screen Computer to press Gravure printing Sheetfed offset DI technology Web offset average Digital print (electrophotography, Flexo toner-based,
Slide 26: Market shares and market growth of key print products
Trends in print production Market shares and market growth of key print products Future market growth in % Displacement by digital print Market growth in offset Current market share in % Forms Greetings cards Manuals Newsletters Directories Maps Reports Calendars/posters Books Direct mail Supplement
Slide 27: Future strategies: differentiation, consultation, flexibility
Trends in print production Future strategies: differentiation, consultation, flexibility Cutting-edge technology is crucial to maintaining competitiveness Potential lies in ! Shorter production times ! Just-in-time deliveries ! Shorter runs ! Ongoing efficiency enhancement ! Cost reduction through p
Slide 28: Global sheetfed offset market by format
Trends in the printing press market Global sheetfed offset market by format Total volume approx. €5.5 bn €1.3 bn €0.9 bn €2.8 bn €0.5 bn B1 format 700 x 1,000 mm B2 format 500 x 700 mm B3 format 350 x 500 mm Large format up to 1,510 x 2,050 mm KBA
Slide 29: German exports of sheetfed offset presses by format
Trends in the printing press market German exports of sheetfed offset presses by format 2003 - 2005 (€m) 2500 2,135 + 11% 1,925 2000 1,687 262 - 16% 313 Small format up to 520 x 740 mm 1500 452 Medium format 1,470 up to 740 x 1,070 mm + 12% 1000 1,311 Large format from 1,052 740 x 1,070 mm 500 + 34%
Slide 30: Trends in printing presses
Trends in printing presses ! Web widths will continue to increase in gravure and offset ! Large-format sheetfed offset has seen strong growth since 1995 ! The Rapida 185/205 and Roland 900XXL have reinvigorated demand for superlarge presses ! Superlarge presses are popular among printers of posters,
Slide 31: Innovation in small and large format
Innovation in small and large format Genius 52UV / Rapida 205 2 Wege zum 5-Farben-Offsetdruck Rapida 205-5 + coater Length: 19.8m Height: 3.7m Format 1,500 x 2,050 mm Genius 52UV-5 Length: 3.8m Height: 1.9m Format: 360 x 520 mm ! KBA has the broadest sheetfed press range in the industry and will be
Slide 32: KBA Rapida 205: the world's biggest sheetfed press
KBA Rapida 205 The world’s biggest sheetfed press ! More than 40 presses with up to seven printing units and coaters sold within two-and-a-half years KBA
Slide 33: Why choose large format?
Why choose large format? ! Investment costs do not increase in direct proportion to sheet size ! Personnel costs do not increase substantially in line with sheet size ! Even though run lengths are shrinking, fast makeready times are no longer a knock-out criterion for large-format presses ! Makeread
Slide 34: Sheetfed offset productivity
Sheetfed offset productivity Maximum output by format m² 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 KBA
Slide 35: Increase in commercial offset web width
Increase in commercial offset web width [mm] 2.500 ? 2.500 2.060 1.905 1.980 2.000 1.727 1.450 1.500 1.260 1.000 1.000 500 0 1977 1979 1986 1996 1998 1999 2004 2007 ? [year] KBA
Slide 36: Increase in rotogravure web width
Increase in rotogravure web width [mm] 4,400 4,320 ~ ~ TR 12B 3,800 3,700 3,680 3,600 TR 10B 3,600 3,520 TR 10B 3,500 TR 9B 3,400 3,300 3,180 3,200 3,080 TR 8B 3,100 TR 7B 3,000 1988 1991 1994/95 1998 2001 2004 [year] KBA
Slide 37: KBA TR12B: a new dimension in rotogravure
KBA TR12B A new dimension in rotogravure Maximum web speed: 16 metres per second Maximum production speed: approx. 60,000 cyl.rph Maximum output: - 144 A4 pages per impression - 8.2 million A4 pages per hour Installations: - Maul-belser, Nuremberg - Prinovis, UK - Total in Europe in 2004/2005: 14 pr
Slide 38: 4/4 output in m²/h: productivity comparison
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 39: KBA creates unique products in key markets
KBA creates unique products in key markets Newspapers ! KBA Cortina compact waterless offset press ! Automatic plate changing and minimal start-up waste make the Cortina cost-effective even for multiple split editions Publication rotogravure ! High-end products for big industrialised printing plants
Slide 40: KBA is moving into profitable niche markets
KBA is moving into profitable niche markets Security printing: KBA-GIORI S.A. ! Around 90% of all banknotes worldwide are printed press built by KBA-GIORI ! Profitable, less volatile Metal decorating: Bauer+Kunzi GmbH ! This KBA subsidiary is the market and technology leader ! Payroll: approx. 50, s
Slide 41: Outlook
Outlook Albrecht Bolza-Schünemann, President and CEO, Koenig & Bauer AG KBA
Slide 42: 1st quarter 2006
1st quarter 2006 ! The volume of new orders for sheetfed presses in January and February was slightly down on the high figure for the previous year ! Demand was stimulated by an open house in Radebeul in March, which attracted over 500 trade professionals ! The web and special press division got off
Slide 43: Market objectives 2006
Market objectives 2006 ! Maintain dynamic growth in sheetfed offset, against fierce competition, with innovative technology and new processes ! Win new accounts with the entry-level presses built by our Czech subsidiary KBA-Grafitec ! Improve sheetfed profitability on a sustained basis ! Build on su
Slide 44: Outlook 2006: sales
Outlook 2006 ! A moderate increase in Group sales thanks to: - a high level of plant utilisation in web and special press division - a big backlog of orders for sheetfed offset presses - an added stimulus to sheetfed business from the Ipex international print media trade fair in Birmingham (UK) in A
Slide 45: Outlook 2006: pre-tax earnings
Outlook 2006 ! Pre-tax earnings (2005: €25.8m) are set to improve further thanks to: - a raft of initiatives that include reducing quality costs - a renewed focus on the profitability of new business - higher margins on scheduled shipments of web and special presses - sizeable backlog or orders for
Slide 46: Koenig & Bauer AG contact
Koenig & Bauer AG Friedrich-Koenig-Str. 4 97080 Würzburg Germany www.kba-print.com KBA