KBA breaks profits record

KBA has reported its highest ever net profit margin on the occasion of its 200th anniversary.

In its annual results for the year ending 31 December 2016, the Wurzburg-headquartered press manufacturer achieved its highest net profit margin, 7.5%, since it was founded in 1817. In 2015 it achieved a margin of 3.5%.

2016 net profit increased by more than 200% (205.6%), from €26.9m (£23m) in 2015 to €82.2m for year-end 2016. Revenue was also given a boost of 13.9%, increasing from €1.02bn to €1.17bn, and pre-tax profits (EBIT) increased from €35.9 to €87.1m, a jump of more than 140%.

In his letter to shareholders, KBA chief executive Claus Bolza-Schünemann said: “Underpinned by a good fourth quarter, the KBA Group achieved the guidance for 2016 that we had raised again upon announcing our Q3 figures. What is more, the medium-term targets issued at the beginning of 2015 with unprecedented high margins were for the most part also achieved or even exceeded thanks to a significant increase in revenue and profit in 2016.

"In addition to growth in service business, the market share gains in the growth areas of packaging and digital printing reflect the success of our strategic realignment.” 

KBA announced in Q3 that it had revised its sales and earnings targets upwards for the full year. 

KBA marketing manager Klaus Schmidt put the profit increase down to three main factors: the recent restructuring programme instituted at the end of 2014, a boost in its sheetfed and digital press sales, and improved capacity utilisation. 

“The competition in the web offset market since the market shrank around 80% in the last 10 years meant we had to restructure the company to be more profitable in other market segments and this is one consequence,” said Schmidt.

“Today we generate around 70% of new machine sales excluding service from packaging, sheetfed offset, screen printing and digital for glass decoration, and growth is continuing also for flexible packaging.”

While revenue for machinery sales was up 16.2% from €736.4m to €855.4m, orders were down in what was a Drupa year, with order intake dropping 2.8% from €1.18bn to €1.15bn, and order backlog at 31 December down 3% (€574.9m to €557.5m).

Schmidt put this down in  the main to a slowdown in the Chinese economy.

“The Chinese economy was slower, growth came down and I think every supplier felt this. The problem in China is that there are many printers that want to invest but they can’t get the financing,” he said.

Distribution costs were up 16.8%, from €123.4m to €144.1m, which was put down to an increase in deliveries along with the cost of Drupa and its Banknote Horizons customer event. KBA reported a successful Drupa, breaking the €100m sales mark and selling more than 60 presses.

KBA’s sheetfed segment saw a boost of 9.5%, from €561.7m to €615m, although order intake fell. Schmidt said a boost in KBA’s service offering had allowed it to continue to increase sheetfed revenues in the wake of falling orders.

Order intake, however, was up in both the Digital & Web segment and also the Special presses segment. Digital sales were up 59%, from €98.4m to 156.5m, and the Special presses segment saw revenue boosted from €422.9m to €472m (11.6%). 

“Digital printing is a young market for us, we only entered in 2012 and have had products since 2014 but the contribution of digital is good. If you put everything together, our own RotaJet series and the HP machines that we build, we are getting lots of orders,” added Schmidt. 

KBA and HP jointly-developed the HP T1100 Simplex Color Inkjet Web Press, which was launched in 2015.

Last week, KBA subsidiary KBA-NotaSys was fined one symbolic Swiss Franc for a corruption scandal, in which it will also have to pay a multimillion euro settlement.

Bolza-Schünemann said: “Following the possible shortcomings in corruption prevention at KBA-NotaSys SA in the past, we closely monitored the legal proceedings, which the Swiss subsidiary had initiated by self-reporting. The proceedings were settled on 20 February 2017.” 

KBA also announced this week the opening of a new demo centre in Wurzburg, due to be fully operational by the start of 2018.