In addition to the general investment restraint on the part of many customers in the corona crisis, travel bans, lockdowns and other restrictions significantly affected the business figures of the Koenig & Bauer group in the first half of 2020. The restrictions caused by the Covid-19 pandemic particularly impeded deliveries of the presses to the international customers as well as the worldwide deployment of the assembly staff and service technicians. At €480.2m, orders were 16.2% lower than in the previous year, although this was better than the sector trend for printing presses published by industry association VDMA. At €404.5m, revenue fell short of the previous year by 20.1%. On the cost side, massive measures were taken to address the effects of the crisis, introducing short-time working from 1 April 2020 alongside other steps. EBIT improved substantially from – €34.9m in Q1 to – €6m in Q2. For the first half of the year, EBIT was – €40.9m after €0.6m in the previous year. At –€44.2m, net earnings as of 30 June corresponds to earnings per share of – €2.68.
- Delivery and pandemic-related revenue decline by 20.1%
- Order intake 16.2% below prior year, considerably better than industry trend
- Earnings significantly impacted by low revenue
- On the cost side, massively counteracted with short-time working from 1 April 2020
and other measures - Equity ratio of 32.2%
Despite substantially lower trade receivables and higher customer prepayments, the half-year loss and the increase in inventories had major impacts on cash flows from operating activities, which came to –€68.6m (2019: –€96.5m). The equity ratio stood at 32.2% at the end of June 2020.
Segment performance
Despite the substantial gains with large-format sheetfed offset presses and folder-gluers, order intake in the sheetfed segment declined by 12.9% over the previous year’s figure of €330.6m to €288m due to lower orders for medium and half-format presses. Revenue of €205.5m was 20.6% lower than the previous year’s figure (€258.9m) for delivery-related reasons and due to the effects of the pandemic. With the book-to-bill ratio coming to 1.4, order backlog rose from €261.6m to €265.9m. Due to lower revenue, EBIT of –€17.4m was below the previous year (–€1.3m).
Order intake in the digital and web segment came to €56.7m, down from €89.9m in the previous year, due to lower orders in the web offset press business and for flexible packaging printing. At €51.6m, revenue was down on the previous year (€64.5m). The order backlog contracted from €111.2m to €71.2m. The lower revenue had a significant impact on the EBIT of –€12.1m (2019: –€10.8m).
The decline in order intake in the Special segment from €175.3m to €150.7m reflects lower orders for security printing, marking and coding as well as glass direct printing. In metal decorating, there was an increase in new business. Revenue fell from €204.9m to €160.1m. The order backlog reached €278.1m after €316m in the previous year. After €6.3m in the previous year, EBIT came to –€10.3m in the first half of 2020 for revenue-related reasons.
Outlook
CEO Claus Bolza-Schünemann said, “In view of the high volatility and the great uncertainties surrounding the severity and duration of the coronavirus pandemic and the success of health, economic and monetary policies, the further global economic development is uncertain. Given these uncertain underlying conditions, it is currently not yet possible to issue any revenue and earnings guidance for 2020 for our group. The management board is working intensively on the Performance 2024 efficiency programme to increase the operating profitability. We have applied for a KfW loan to supplement the existing syndicated credit facilities. In addition, improvements in working capital and cash flow are at the top of the agenda together with the strategic focus on packaging printing and digital services.”
