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Koenig & Bauer meets its own forecast for 2023, expects stable business in 2024

Koenig & Bauer claims it has fulfilled its own forecast for 2023. This is based on its preliminary and as yet unaudited figures.

Despite the ongoing challenging global economic environment, which is being exacerbated by a number of factors such as higher energy, material and personnel costs, Group earnings before interest and taxes (EBIT) reached €29.9m. This places EBIT within the forecast range of €25m to €35m, which was adjusted on 8 November 2023. At €1,326.8m, Group revenue is at the upper end of the guidance of €1,300m. In the previous year, revenue amounted to €1,185.7m and EBIT to €22.0m. Consequently, revenue improved by 11.9 per cent compared to the previous year, while EBIT increased by €7.9m, translating into an increase of 35.9 per cent. The EBIT margin reached 2.3 per cent, compared with 1.9 per cent in the previous year.

The profitability despite the start-up and trailing costs in the Digital and Webfed segment is due to more efficient handling of inflation-induced additional costs (material, energy and personnel) as well as improved cost management in the third quarter as a result of the absence of any recovery in demand. At the same time, it was possible to largely pass on the higher energy, material and personnel costs, while the temporary increase in the costs of materials subsided again.

In the fourth quarter, Koenig & Bauer was able to remain on the growth trajectory that it had adopted in the first half of 2023, despite a weaker third quarter. In this regard, the final quarter showed its usual strength again, with revenues coming to €435.7m (previous year: €380.0m) and EBIT to €32.0m (previous year: €25.0m).

Order intake amounted to €1,287.9m at the end of the year, falling slightly short of the previous year’s historically high figure of €1,329.3m. The book-to-bill ratio stood at 1.0 in the fourth quarter, up from the previous year’s figure of 0.8. As planned, the order backlog contracted from €950.4m to €911.5m at the end of the year as a result of the completed deliveries.

Order intake in the Special segment increased by 37.1 per cent to €538.8m as of the end of the year (previous year: €392.9m). In the fourth quarter alone, order intake amounted to €268.1m, underpinned by an order in the Banknote Solutions business unit received from the United States Bureau of Engraving and Printing in Washington, D.C. At €413.7m as of 31 December 2023, revenue was slightly down on the previous year’s figure of €417.1m. However, at €23.0m, EBIT almost reached the previous year’s level of €23.2m.

At €606.2m, order intake in the Sheetfed segment was below the extremely high figure of €813.5m recorded in the previous year following a sequential improvement in the fourth quarter. However, the previous year had been characterized by post-pandemic catch-up effects as well as greater stockpiling by customers and brand owners as a result of supply chain and material bottlenecks. After a strong final quarter, revenue increased by 16 per cent to €779.8m (previous year: €672.2m). This performance is also reflected in EBIT, which climbed by 56.8 per cent to €29.8m (previous year: €19.0m).

At €179.8m, the Digital & Webfed segment recorded a 9.9 per cent increase in order intake (previous year: €163.6m). Revenue also climbed by 23.2 per cent year-on-year to €172.3m (previous year: €139.8m), not least due to a successful final quarter. EBIT was impacted by start-up and trailing costs in the second and third quarters in connection with the introduction of the new flexo, corrugated board and digital printing products, particularly in the second and third quarters, and amounted to €-23.9m after 12 months (previous year: €-19.3m).

Dr Stephen Kimmich, CFO, comments, “As we are still operating in an extremely challenging market environment, we have continued on our path aimed at improving operating profit. Nevertheless, we are aware that Koenig & Bauer needs to be more profitable looking forward. Just like our successful customers, we must focus on the value drivers that are spurring our transformation from a printing press manufacturer into a technology company. In addition, we have to address the challenges of a world characterized by rapid and unpredictable change.”

Koenig & Bauer continues to face a challenging macroeconomic environment in 2024. Even so, the management board expects the EBIT margin and revenue to remain stable at the previous year’s level in 2024. Accordingly, it projects operating earnings of between €25m and €40m and revenue of around €1.3bn. However, Group EBIT for 2024 will be burdened by up to €10m as a result of spending on Drupa.

The Special and Digital & Webfed segments should make a disproportionately large contribution to both EBIT and revenue. By contrast, the Sheetfed segment is expected to account for a disproportionately small proportion of earnings and revenue in the first half of 2024. In the Sheetfed sector in particular, a wait-and-see attitude ahead of the industry’s leading trade fair Drupa could lead to purchasing restraint.

Given the persistently muted economic situation, the company projects an EBIT margin of six to seven per cent in 2026 at the latest, accompanied by Group revenue of €1.5bn. In the medium term, it is looking for revenue of around €1.8bn and an EBIT margin of eight to nine per cent.