KBA ups sales and profit targets
Friday, August 12, 2016
An upbeat KBA has increased its sales and profits targets for the full year and is predicting that its previously loss-making Digital & Web division will be in the black by the year-end.
The Würzburg-headquartered press manufacturer described Drupa as “a big success” for the company.
“We were pleasantly surprised not only by the high volume and nationalities of the visitors but also by many decision makers’ appetite for investment,” said chief executive Claus Bolza-Schünemann.
KBA said it had booked sales of more than €100m at the show.
About a third of the orders booked at Drupa were included in the results, with the rest to follow in the second-half, he said.
Order intake in the six months to 30 June was up 1.9% year-on-year at €618.8m (£532.4m), while sales jumped 29.7% to €553.9m and order backlog rose by 7% to €639.8m.
Gross margins rose from 24.2% to 30.7% and the group’s R&D spend increased by €1.2m to €28.1m “due to higher expenses for new products and further developments for the digital printing and packaging markets”.
KBA said all three of its segments posted “sizeable gains”.
At its Sheetfed wing order intake was €77.3m lower than the prior year at €290.8m, in part due to a slowdown in business in the key Chinese market. But sales were up 22.1% to €291.7m, while order backlog dipped to €281.9m (2015: €310.6m).
“In the coming months we anticipate stimulus from the orders placed at Drupa yet to be booked,” the firm said.
The Sheetfed division’s profits jumped from €3.8m to €8.6m, despite costs associated with the development of the new VariJet 106 hybrid sheetfed inkjet press with partner Xerox, and its attendance at Drupa, which involved a circa €5m spend for KBA.
“At Drupa Rapida sheetfed presses in all format classes, from Rapida 75 up to Rapida 164, contributed to approximately 90% of the orders signed at the show. From the number of machines ordered the make-ready champion Rapida 106 was the most successful,” said KBA director of marketing Klaus Schmidt.
Digital presses for the décor and corrugated markets contributed to a big jump in sales at KBA’s Digital & Web operation, which increased by 75.7% to €64.5m. Order intake slipped to €66m from €69.2m while the order backlog was €71.8m (2015: €83.4m).
Despite heavy costs involved with its raft of industrial digital press developments, including its partnerships with RR Donnelley and HP, the losses at Digital & Web were drastically reduced, from €8.9m to €900k and the division made a profit in Q2.
“We expect this segment to be in the black by the end of the year,” stated Bolza-Schünemann.
Schmidt said KBA took orders for four newspaper web offset presses and one commercial web offset press around Drupa.
It also booked more orders from HP for the huge HP T1100S PageWide Web Press for corrugated packaging.
He reported “growing interest” in the new RotaJet L series for commercial, industrial and packaging printing, which was shown printing live for the first time at Drupa, and the RotaJet VL for decorative printing.
KBA also held a special event at KBA-NotaSys in Lausanne, Banknote Horizons, for security printers during the period, and its Special presses segment (including security, metal decorating, coding, flexible packaging, and direct-to-glass decoration) saw order intake leap 47.7% to €294m, while sales jumped 37.7% to €233.9m.
Order backlog at the division was up 38.2% on the prior year at €310.2m.
The completion of a large security press project contributed to a big increase in profits for specialist presses, with a more than five-fold increase in EBIT to €20.3m (2015: €3.6m). KBA said it had a “solid project pipeline” for Special presses, which are “less influenced by the economy than ad-driven printing”.
KBA also outlined a host of issues causing uncertainty, including the Brexit decision in the UK, recent terror attacks, political conflicts and financial issues affecting the global economy.
Despite these challenges, the group said its increase in sales and order backlog, alongside “a raft of promising customer projects and the growing service business” had prompted the group’s board to raise sales and earnings targets for 2016.
It is now targeting group revenue of €1.1bn-€1.2bn and an EBIT margin of around 4%.
KBA’s expansion into print finishing through the takeover of die-cutter manufacturer Iberica was completed just after the end of the second quarter.
KBA shares slipped by 1.74% to €48.47 after the announcement.