Koenig and Bauer find reasons to be cheerful

Koenig and Bauer has released its preliminary results for its 2020 financial year, which revenue of €1,029 million but with an EBIT – earnings before interest and taxes – loss of -€68 million, or -€19 million once adjusted for special items.

Koenig and Bauer’s new Rapida 76 can produce up to 18,000 sheets per hour.

Strangely, according to the accompanying press release, Koenig and Bauer seems quite happy with this, pointing out that the results are better than it had forecast. However, this is mainly due to Koenig and Bauer having shifted the goal posts in how it records revenues. Essentially, the company now books most of the revenue from its press sales at the point where the press is installed, rather than when its ordered. It announced this policy in September 2020 but has retroactively applied it to the previous year’s figures, meaning that 2020 figures have benefited from some of the 2019 sales. 

Dr Stephen Kimmich, CFO at Koenig and Bauer, explained: ““We expect to reduce volatility in revenue recognition of our new printing press business with the new accounting policy. This should also permit more balanced budgeting in the future. The retrospective adjustment gives us improved transparency and comparability with previous years.”

As a result of the adjustments, Group revenue increased by around €51m net and consolidated EBIT by around €8m in 2020. It also includes other non-recurring effects that have already been communicated: exceptional expenses in connection with the “P24x” efficiency programme (-€58m) and exceptional income from the successful outcome of a legal dispute (€4m) and from the sale of real estate in Frankenthal (€5m). 

Nonetheless, the figures do show signs of a recovery in terms of new orders. The company say new orders for the year as a whole of €975 million, which is down 14.5 percent on the 2019 figure of €1141 million – not a great surprise given the pandemic. But order picked up in the fourth quarter to €262 million.

The company is predicting further improvements in 2021 with revenues around 4 percent to €1,070 million, based on the assumption that the vaccination program will put an end to the restrictions caused by the corona virus.  I think it’s worth pointing out that the rate of vaccination varies greatly from country to country and that this will impact any likely recovery. 

Koenig and Bauer is also putting a lot of faith in the P24x efficiency programme that it announced last September. This aims to cut costs by around €100 million by 2024, whilst increasing new product developments. The company is currently focussing on staff layoffs with some 700 to 900 jobs at risk in the short and medium term. Dr Andreas Pleßke, spokesman for Koenig and Bauer’s management board, commented: “P24x is our road back to the planned group growth in the medium term. We are focusing on packaging and a portfolio strategy in attractive markets, on strong research and development, on synergistic effects in production and on the further development of our service business to improve our customers’ total cost of ownership.”

We’ll get the full results on 24th March 2021. In the meantime, you can find more details at koenig-bauer.com

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