At its annual meeting in Würzburg, president and chief executive Helge Hansen said the “sober market” for web presses left the company with no alternative to the cuts at Frankenthal, Würzburg and Trennfeld to restore competitiveness and profitability.
An outline agreement on ending the strike was signed the day before the meeting and a ballot on whether work should resume was being held on Monday. Talks have also started at the other two locations.
The measures will reduce the group workforce from 6,377 at the end of May this year to well below 6,000 at the end of 2013.
Hansen reported a substantial increase in new orders for sheetfed and special presses in the first five months of the year compared to last year, but said big web presses for newspapers, magazines, catalogues and other print media that compete with online services for both readers and ad revenues were a major cause of concern, with global demand well below pre-crisis levels.
Even so, preliminary figures to June 1 for the world’s second-largest press manufacturer show a leap of 21 per cent in new orders to around 600 million Euros and 27 per cent in sales. The order backlog was up 40 per cent on the previous year. Hansen anticipates a similar improvement in the group’s half-year performance.
Sales in the first five months fell short of annual targets, but despite delays in web press shipments caused by the Frankenthal strike, management expects a single-digit percentage increase in group sales for 2011 over the previous year, and “a moderate improvement” in earnings.
Hansen says “merger scenarios” mooted would have led to more redundancies and closures, a loss of productivity through staff tensions, and the costs that these entail. “With industry players working to capacity until 2007, the charge of failing to diversify sooner can only be levelled by those who have no idea how hard it is to change horses in midstream,” he says.
Classic press manufacturers must however redefine their objectives: Over the past ten years KBA has addressed profitable niche markets through acquisitions, reducing its dependence on volume markets such as commercial web and newspaper offset. Non-print-specific business lines with good potential for growth include air purification and industrial coding systems. A further step is a licensing agreement announced in March which will enable the company to expand in the inkjet sector by building and distributing new digital press models.
Nonetheless, diversification remains on the board’s agenda, Hansen says.
Following a two-year hiatus a dividend of 30 cents per share is being paid from a net group profit of 12.5 million Euros.