Koenig & Bauer has fully achieved or exceeded its guidance for 2017, driven by strong revenue and earnings in the fourth quarter.
The printing press manufacturer’s consolidated figures show that with the increase in revenue, earnings and order intake achieved last year it is well on track towards achieving its medium-term targets by 2021.
With security business remaining strong, Koenig & Bauer achieved growth in the packaging markets for cardboard printing, metal, glass and hollow container decorating and coding as well as with new products such as rotary and flatbed die-cutters. Market share was widened in all business fields.
CEO Claus Bolza-Schünemann: “In addition to the market success of the rotary die-cutter, the sharp rise in new contracts for flatbed die-cutters over the previous year exceeded our expectations substantially.” Moreover, the group’s revenue and earnings growth was particularly underpinned by expansion in service business. Thus, the proportion of group revenue generated by service business widened from 23.5% in the previous year to 25.6%.
CFO Mathias Dähn: “This shows that the group-wide service initiative launched at the beginning of 2016, with which we want to widen the share of service business in group revenue step by step to 30% by 2021 in the interests of greater earnings potential and stability, is now beginning to bear fruit. We want to create satisfied and loyal customers by offering excellent service. At the same time, rising service revenue is an important measure of customer satisfaction for us.”
Koenig & Bauer is working intensively on further applications in packaging, digital and industrial printing to achieve additional profitable growth beyond its medium-term targets. One key aspect is corrugated board printing, which is flourishing at above-average rates thanks to long-term trends such as home-shopping as well as more sophisticated and colourful outer packaging.
CEO Claus Bolza-Schünemann: “We have already started marketing the sheetfed flexo presses CorruFLEX and CorruCUT (with an integrated rotary die-cutter), both of which have been developed with a number of unique features. In early 2019 we will be installing a CorruCUT system at the pilot customer Klingele.” A further target market is 2-piece can printing.
Explains CFO Mathias Dähn: “As a globally leading supplier of presses for 3-piece can printing, we want to expand our profile by entering the 2-piece can market. Presented in May 2017 with a number of important advantages for users, the newly developed CS MetalCan press for 2-piece can decorating met with strong customer interest. Following two contract signings, we are now able to commence intensive field-testing with the target of sales launch at the end of 2018.”
In digital printing, Koenig & Bauer sees an additional growth option as digitisation no longer poses any substitution risks in the markets addressed by the company.
At €1,217.6m, group revenue reached the target corridor of up to €1.25bn defined in the guidance. With revenue up 4.3% over the previous year (€1,167.1m), Koenig & Bauer fully achieved its mid-term organic revenue growth rate of around 4% p.a., thus more than making up for the further decline of €25m in revenue from newspaper and commercial web presses.
The group’s new orders rose substantially by 10.1% over 2016 (€1,149.7m) to €1,266.3m. With orders up 29.7% over the previous year, the fourth quarter was particularly strong. The book-to-bill ratio came to 1.04, while order backlog stood at €606.2m, up 8.7% on the previous year.
The increased revenue in tandem with more service business across the Group caused the profit rise. In addition to expenses for portfolio additions, new products and IT systems, earnings came under strain from production service provider KBA-Industrial Solutions and the measures to optimise flexible packaging printing.
Adjusted for the non-recurring income in the previous year, EBIT climbed from €62.9m to €81.4m. Driven by the positive earnings development and outlook for the group, a tax income of €12.7m arose again from the recognition of deferred tax assets. At €81.1m, group net profit (previous year: €82.2m) translates into earnings per share of €4.91 in 2017 (2016: €4.98).
