Würzburg/Dobruška / Strong growth in sheet and web · New orders up 17.7% · Sales up 29.2% · Upturn in domestic market · Operating profit · Annual target reaffirmed

German press manufacturer Koenig & Bauer AG (KBA) booked a 17.7% increase in group order intake to €860.9m (2004: €731.6m) in the first six months, despite the absence of any exceptional stimulus like last year’s Drupa trade fair. Both divisions achieved strong growth, with new orders for sheetfed offset presses up 12.3% at €479.1m and for web and special presses up 25.2% at €381.8m compared to the same period in 2004. Group sales totalled €691m, 29.2% above the prior-year figure of €534.9m. The €1,062.9m order backlog was also higher (30.06.2004: €1,053.6m) and safeguards production until well into next year.

A €4.2m operating loss (EBIT) in the first quarter was turned into a €1.2m profit at the end of the second. A financial loss of €5.7m translated into a pre-tax loss (EBT) of €4.5m, substantially lower than a year earlier (-€18.5m). The net loss including deferred taxes was €5m (2004: -€16.5m), which corresponds to a proportionate net loss per share of 31 cents (2004: -€1.02).

According to KBA president and CEO Albrecht Bolza-Schünemann the loss was primarily due to currency losses, higher prices for commodities and energy, below-target sales and the additional cost of getting a new generation of sheetfed presses up and running.

Cash flows from operating activities at 30 June totalled €66.6m, well above the previous corresponding period (-€8.1m), while the free cash flow swelled to €56.5m (2004: -€31m).

Perceptible upturn in domestic market

An upturn in the German advertising and print industries boosted deliveries of sheetfed, commercial, newspaper and publication rotogravure presses, driving domestic sales up to €136.5m – a 78.2% improvement on the prior-year figure of €76.6m. As a result the export level eased back from the 85%-plus of recent years to 80.2%, closer to its historic average.

While sales to the rest of Europe climbed 20.5% to €323.9m, in North America they surged 74% to €101.9m. Asia-Pacific sales, however, slid to €97.4m (2004: €110.8m). The rest of Europe thus remained the biggest market for KBA products, contributing just under 47% to total group sales, followed by domestic sales. After a lapse of some years, North America moved back into third place with 14.7%, ahead of Asia and the Pacific (14.1%). This will only be temporary, since buoyant demand for KBA sheetfed presses in China, and scheduled shipments of web and security presses to the Far East, are set to generate a higher volume of sales in the near future.

More staff in Saxony

KBA’s sheetfed offset division maintained the rapid growth of the past twelve years to secure second place among German manufacturers in what is the biggest sector of the press market. This was reflected in the geographical breakdown of the group payroll, with the sheetfed facility in Radebeul (near Dresden) hiring 158 additional staff while KBA’s west German web press plants laid off 160.

At the end of June there were 7,776 employees on the group payroll, 489 more than at the same time the previous year. The consolidation of metal-decorating press manufacturer Bauer+Kunzi in Ditzingen, near Stuttgart, at the beginning of the year and of Czech sheetfed press manufacturer KBA-Grafitec in Dobruška, near Hradec Králové, in March increased the payroll by 53 and 418 respectively. Excluding these additions the total number of employees rose by 18.

€1.5bn sales and return to profit targeted

With earnings expected to receive a major boost from higher sales and a more profitable product mix in the second half of the year, KBA management reaffirmed the €1.5bn sales target announced some months earlier. And despite the half-year loss announced at the AGM in June, the group stands by its goal for 2005 of a higher pre-tax profit than in 2004 (€15.9m).

The financial statements can be downloaded as a PDF file fromhttp://www.kba-print.de/en/investor/berichte/05.html

*including Bauer+Kunzi and KBA-Grafitec

Disclaimer
The projections contained in this press release were founded on data available at the time of issue. While management believes them to be accurate, the impact of external factors beyond its control, such as changes in the economy, exchange rates and the print media industry, may give rise to a different outcome from that projected. Koenig & Bauer therefore accepts no liability for transactions based upon these projections.