Koenig & Bauer well positioned in the first half of 2022 despite all the external uncertainties
July 30, 2022The Koenig & Bauer Group (“Koenig & Bauer”) can look back on a challenging first half of 2022. The current operating environment is one of the most difficult in Europe’s recent history. Almost all manufacturing companies are caught between high customer demands on the one hand and a long list of adverse factors mainly on the supply side on the other. “Despite all the current uncertainties and temporary effects, we are well positioned in multiple respects and are continuing to strategically align our business model along the growing market for packaging”, says Dr Andreas Pleßke, Chief Executive Officer of Koenig & Bauer, adding that “our end markets, which primarily address the food, beverage, pharmaceutical, and cosmetics sectors, are healthy”.
Order intake boosted by growth in the Sheetfed and Digital & Webfed
segments
Customers ordered
around 13% more in the first half of 2022 than in the already good period of
the previous year. This performance was particularly underpinned by the
increase of around 22% in orders in the Sheetfed segment and of around 46% in
the Digital & Webfed segment. At €692.9m, order intake was once again above
the industry-wide average for printing presses in the first five months, rising
by just under 5%. At around €1bn, Koenig & Bauer’s order backlog as of 30
June is one of the highest in the company’s recent history. The customers’
investment decisions are thus showing that Koenig & Bauer has done a good
job in recent years and that the decision to focus on products and solutions on
the structurally growing market for packaging is paying off.
Koenig & Bauer is systematically pursuing this path and has now joined
forces with Celmacch Group S.r.l., a leading manufacturer of high board line
flexographic printing presses and rotary die cutters for the corrugated board
industry. Koenig & Bauer already addresses the corrugated cardboard market,
which accounts for the greatest proportion of the total market for packaging in
terms of value, with CorruCUT and CorruFLEX. Looking forward, Celmacch will
trade under the name Koenig & Bauer Celmacch and the joint product family
will cover all price and performance classes in this market segment under the
name “Chroma”. Christoph Müller, the member of the Management Board responsible
for the Digital & Webfed segment, comments: “The success of this merger is
based on complementary skills to actively leverage opportunities for growth in
the corrugated cardboard market.”
Early renewal by the Supervisory Board of contracts to ensure continuity
on the Management Board
In this context,
Christoph Müller’s contract has been renewed ahead of schedule, meaning that he
will remain on the Management Board until 30 June 2026, after being initially
appointed in 2006. He is responsible for new developments in corrugated
board and digital printing as well as strategic partnerships, such as with hp.
This renewal will ensure the smooth integration of Celmacch within Koenig &
Bauer’s global sales and service network. Ralf Sammeck has been a member
of the Management Board since 2007. He is responsible for the digital
transformation within the Group and, with his experience, will ensure that the
Sheetfed segment continues to expand its successful position in the growing
packaging market and to drive forward digitisation even after drupa
2024. His contract has been renewed by a further year until 30 June 2025.
Independence from pipeline gas being stepped up to achieve maximum
self-sufficiency
Continuity and
independence – these are two characteristics that are paying off twice in the
current situation given the list of adverse factors: geopolitical
uncertainties, an impending gas supply freeze and the disruption to global
supply chains. Over the last few months, Koenig & Bauer has been working on
reducing its reliance on pipeline gas ahead of an imminent gas shortage. This
means that the process gas previously required for production can be completely
substituted from the end of July 2022. In addition, supplies of fuel for
heating energy will be modified at the main production sites by the beginning
of September. Unforeseen fluctuations in the power grid cannot be ruled out as
a consequence of limited gas supplies. Koenig & Bauer is also prepared for
this scenario and, with the measures taken, sees its own production in all European
plants as very largely secured, even in the event of a possible Russian gas
supply freeze.
Operating earnings improved despite increase in inefficient production
costs resulting from disruptions to global supply chains
At €491.8m at the end
of the first six months, Group revenue was virtually unchanged over the
previous year and well above the industry average, which revealed a decline of around
13% after the first five months. In terms of the individual quarters, revenue
in the second quarter was higher than in the same quarter of the previous year
as well as the first quarter of 2022. With respect to earnings, the higher cost
of materials and energy was almost completely offset by the price increases
that had been announced. However, the proportion of inefficient production
costs widened in the second quarter due to worldwide disruptions to supply
chains. They are also necessitating additional or retro work on systems and
presses and exerting strain on productivity at the plants and on site at the
customers. The central purchasing system introduced under the P24x efficiency
programme is also paying off given the disrupted global supply chains.
Generally speaking, successful progress was made with the P24x programme in the
first half of the year, resulting in savings of around €22m. At €-13.8m, Group earnings
before interest and taxes (EBIT) were still in negative territory. The previous
year’s figure of €6.4m had been boosted by an amount of €21.3m resulting from
the more efficient implementation of the P24x personnel measures and stood at
€-14.9m in operating terms. Accordingly, operating EBIT improved by €1.1m, corresponding to an operating EBIT
margin of -2.8%, compared with -3.0% in the previous year. After income taxes,
the Group posted a net loss of €-15.8m as of 30 June 2022 (previous year: net
profit of €1.1m). This translates into earnings per share of €-0.98 (previous
year: €0.05). Given the Group equity ratio of 29.1% (end of 2021: 28.7%),
Koenig & Bauer is financially well positioned thanks to this equity base
and the freely available cash and cash equivalents of more than €250m.Full-year forecast for 2022 and medium-term goals
reaffirmed
The second half of the year
continues to be marked by great uncertainties. The global disruptions to supply
chains are just as unpredictable as the geopolitical situation and high
inflation in Europe and the United States and could place a damper on the
global economy in the second half of the year. This is exacerbated by the currently
unknown course of the pandemic in the winter months. The planned delivery of
our presses and systems for the second half of 2022 poses a major challenge and
must be reassessed if the global supply chain situation continues to
deteriorate. Accordingly, it is still not possible to provide a reliable
full-year forecast for 2022 as of the date on which the report on the first
half of the year was completed; Koenig & Bauer continues to anticipate a
slight year-on-year increase in Group operating revenue and the operating EBIT
margin in 2022 and confirms its medium-term targets.