The pandemic has delivered problems in terms of moving machinery and people, which in turn has hit Koenig & Bauer in the financials.
The press manufacturer experienced a 20% fall in revenue in the first six months of this year, from €506.0 million to €404.5 million, with a drop in order intake of 16% from €573.3 million to €480.2 million. The impact of delayed decisions was exacerbated by difficulties in shipping machines to customers and deploying crews to install machines that have arrived.
The project to print currency for Egypt and for drinks cartons in Texas, for example, have both been suspended. Installations of sheetfed presses, including at Alexir in the UK, are taking longer than anticipated because of social distancing measures and the difficulties associated with international travel.
Chief executive Claus Bolza-Schünemann says: “Travel bans, lockdowns and other restrictions impeded deliveries of our presses to our international customers as well as the worldwide deployment of our assembly staff and service technicians.
“In many cases, our service team had only limited access to our customers’ packaging printing sites as these are blocked for third parties to ensure a smooth production chain. In addition to the general investment restraint on the part of many customers in the corona crisis, the restrictions described above also led to delays in contract signings.”
Orders for new flexo presses, as well as for web offset machines, were down as a result. The drop in orders affected all divisions, exacerbated perhaps by the delay in business due to have been confirmed at Drupa.
Actions taken by the company, reducing hours worked and the unavoidable fall in travel expenditure, reduced the losses in the second quarter compared to the first. As a result the pretax loss, which had been €34.9 million after three months was recorded as €40.9 million after six months. This compared to a €0.6 million pretax profit in 2019.
The slow down in production has helped contribute to an order backlog of €609.4 million. While this is lower than at the same point in 2019 when it stood at €678.2 million, it is greater than at the end of 2019. And in the sheetfed division, the order backlog on 30 June this year was actually higher than in 2019 at €265.9 million (€261.6 million)
Bolza-Schünemann points out that Koenig & Bauer’s performance was better than the industry figures for printing presses produced by the VDMA trade association. The company has agreed a €120 million KFW emergency loan facility to be available if required. The immediate focus is now on improving working capital and cash flow alongside the strategic focus on packaging and expanding digital services.
The company’s experience is shared by Manroland Sheetfed, part of Langley Holdings. In the statement accompanying the half year figures from that group, chairman Tony Langley reports that the strong order backlog for the press manufacturer at the start of the year was hit in a sharp slowdown in March.
Demand, he says, remains depressed, though he adds that there are signs of a pick up in Manroland’s Chinese market.
The problems caused by the pandemic, affecting Koenig & Bauer's ability to deliver and install presses under lockdown as well as social distancing conditions, and delayed decisions have had a big impact on the company's results.