KBA Group posted 20% more orders in the first quarter of 2017 than in the same period last year with a “substantial increase” in orders for medium-format sheetfed presses, particularly in southern Europe.
The German press manufacturer maintained revenue over the period at a similar level to the first quarter of 2016 - €259.1m (£218.4m) compared with €258.8m - but higher raw material costs meant gross profit dipped from €77m to €73.5m.
However, because last year’s figures included expenses of €6m caused by adverse currency effects and long-standing legal disputes, which did not arise this year, the company was able to nearly triple its net profit, from €1.6m in Q1 2016 to €4.7m in 2017.
Excluding its home market of Germany, where revenue dipped from €37.9m to €35.3m, the rest of Europe was KBA’s bright spot in the quarter, growing turnover from €74.6m to €91.9m.
The company said that “more sheetfed press installations in southern Europe in particular combined with growth in other business fields caused the proportion of revenue in Europe excluding Germany to widen from 28.8% to 35.5%”.
It also said the outcome of the French election has “substantially reduced the political risks for the EU as an important sales market for German machinery”. But risks are still being posed by Brexit and the trading policies announced by the Trump administration.
Among the three divisions – Sheetfed, Digital & Web, and Special – Sheetfed and Special both posted profits of €4.6m, but Digital & Web ended the quarter with a €2.3m loss.
More orders in security printing and glass decorating caused new business in the Special segment to rise by over 25% to €125.7m, though metal decorating orders slumped as expected as customers waited for the Metpack trade show in May. Overall revenue for the Special segment increased by 2.6% to €87.8m and profit grew from €1m to €4.6m.
The company said that packaging printing, from which it derives around 70% of its new press revenue, is growing in correlation with growth in global GDP and the global population.
In the Sheetfed segment, more service business and a substantial increase in orders for medium-format presses caused order intake to rise by 12% to €152m, but revenue, at €150m, fell 3% short of last year. Despite better margins, profit of €4.6m was slightly below last year’s €5.7m due to lower revenue and development expenses for new products.
Chris Scully, sales director for sheetfed presses in the UK and Ireland, said luxury packaging and the high-performance commercial market were both delivering high growth for KBA here, where the Rapida 106 is KBA’s best seller.
“The pharmaceutical side is on the up, demand for whisky has gone through the roof – everybody is looking at a product and trying to make it more tactile, more appealing, more expensive, to give the buyer more bang for their buck. And we’re seeing companies morphing into bigger, more sustainable businesses – packaging companies are moving into point-of-sale and becoming ‘solutions providers’. That’s been good for us.”
Scully said few printers are buying new presses with the aim of doubling their sales nowadays – they are more likely to install a new one to replace two older ones to increase efficiency. Driving costs down is key, he said, and as a global supplier KBA can offer customers the opportunity to engage in global benchmarking so they can compare their performance against other KBA customers worldwide.
Since the start of the year, KBA Group’s activities in the growing flexo packaging printing market have been assigned to its Digital & Web division. At the beginning of May, the group unveiled a high-performance technical solution for printing two-part beverage cans, as well as the world’s first digital printing press for migration-free metal decorating.
The outlook for Digital & Web is positive as the value of orders increased by 18.5% to €57.7m in the quarter, but a slight drop in revenue, along with greater R&D investment and the building of a new demonstration centre for digital and flexo presses in Würzburg, led to the €2.3m loss in the division.
The company’s newest subsidiary, KBA-Iberica Die-Cutters, performed well with the company declaring that “order intake, revenue and EBIT from flatbed die-cutter business substantially exceeded our expectations in the first quarter”.
KBA also announced that it has made two new appointments to its executive board: Ralf Sammeck will lead the Sheetfed Division and coordination of global equipment sales, while Christoph Muller with head up Digital & Web and take charge of coordinating services initiatives.
By 2021, KBA aims to reach an annual organic growth rate of around 4% and to grow profits by €70m.
Group chief executive Claus Bolza-Schünemann concluded that the group “remains on a successful trajectory in its 200th anniversary year of 2017 following record results last year. The clear focus on the growth markets of packaging, industrial and digital printing as well as the group-wide service initiative launched at the beginning of 2016 are increasingly paying off.”
KBA employs 5,327 people worldwide.