Reporting to the company’s eighty-fourth annual meeting, new KBA president and chief executive Helge Hansen reported “too few” large web press projects despite increasing its market share to a claimed 50 per cent, and a substantial lift in sheetfed orders. The sheetfed upturn saw business drummed up at trade fairs in the Middle East and Asia largely balancing a shortfall in the first quarter. But Hansen warned the serried ranks of shareholders that demand for big newspaper and commercial web presses remains unsatisfactory. “While we have increased our share of the global newspaper market to almost 50 per cent, the total volume of new orders booked in the first five months was well below our target for the year,” he says. “The global recession and financial meltdown continue to impact on demand in the sector, and are now affecting sales of special presses for niche applications. “At present the only bright spot in this gloom is the security printing sector.” Hansen blames the problem of customer financing and changes in banks’ lending practices which have in many cases put paid to planned investments. Referring to recent media reports of state aid for press manufacturers, Hansen warned against generalisations based on isolated cases, and argued for a more differentiated assessment of individual enterprises. He emphasised the KBA group’s “solid financial and liquidity base compared to certain rivals” and says KBA currently has no net bank debts. “On the contrary, in recent months we have improved our net financial position to a good €36 million and our operative cash flow is positive. At the end of March our equity ratio stood at 33.9 per cent, well above the norm for the engineering sector. In addition to €100 million in funds we have a credit line of €160 million, of which more than 60 per cent is guarantee credit required to safeguard the customer down payments that are routine in the heavy plant industry. “We have applied for a government guarantee effective from 1 April 2010. As you are aware, at present such guarantees reflect changes in banks’ risk policies rather than in KBA’s liquidity.” Hansen says KBA is a solid, solvent enterprise and has no need of the “state prop” somewhat prematurely assigned it by a certain business journal. However, “we are concerned about possible competitive imbalances that may be caused by government intervention.” Limited prospects for growth in print KBA will continue to expand its service activities, and is also aiming to expand its consumables business. But like many other industry insiders, once this crisis has passed the KBA management board does not see the global market volume for press technology returning to the high levels of 2005 or 2006 for the foreseeable future. Growth is being limited by changes in media consumption habits, ongoing consolidation in the print sector, a rapid increase in press productivity and the emergence of low-budget rivals in threshold economies like China and India, Hansen says. Last year, amid financial and economic turbulence, KBA posted group sales of €1.53bn, a good €200m below the record €1.74bn for 2006, and this year the figure will shrink by over €300m to just under €1.2bn. Helge Hansen comments: “We and the other press manufacturers cannot stop the market from shrinking, so to achieve a decent return again as soon as possible we must adjust our capacity accordingly.” Hansen says that to achieve the growth KBA requires in the medium term, it must look to high-potential sectors where it can capitalise on its skills in engineering, high-quality machine manufacture and global distribution. “Two of the sectors we are focussing on are packaging and green energy technology, and here we have already developed specific concepts,” he says. “Alongside a more customary merger or acquisition we are considering taking a stake in a promising new start-up or entering an alliance with an established player as a means of gaining access to these markets. Our solid balance sheet and finances certainly give us plenty of scope.” According to the preliminary figures quoted by Hansen, in the first five months of the year the KBA group posted a 20.7 per cent decline in new orders (1st quarter: 40.7% decline). However, the revival in sheetfed business swelled the order backlog at the end of May to €557.1m (1st quarter: €500.8m). Group sales, at €347.5m, were 34.7 per cent down on the corresponding figure for the previous year and 10.7 per cent below target. Meeting the group target for 2009 of around €1.2bn will depend largely on market trends in coming months. Said Hansen: “Following last year’s substantial loss we have a real chance of achieving our ambitious goal of posting a balanced result, even if sales are just shy of €1.2 billion.” In view of the net loss posted by the parent, Koenig & Bauer, no dividend will be paid for 2008. Detailed figures for the first half-year will be published on 14 August.