Koenig & Bauer holds firm in a sluggish economic environment in the first quarter of 2022
- Order intake up 22.1% to €349.1m (previous year: €286m)
- Revenue of €238.4m down slightly by 2.1% compared to the previous year – share of service activity up in the first quarter of 2022
- Order intake and revenue well above industry average
- Business performance heavily impacted by the pandemic, supply chain bottlenecks and the associated increase in the cost of materials and energy
- Despite difficult underlying conditions and a slight drop in revenues, EBIT improved by €0.4m to -€8.5m (prior year: -€8.9m); EBIT margin -3.6% (prior year: -3.7%)
- Savings of around 10 million euros realized thanks to the P24x efficiency program in the first quarter of 2022
- Free cash flow impacted by change in net working capital requirement and high order backlog
- Order backlog increased to €917.5m (prior year: €674.5m), providing a solid base for the remainder of 2022
- 2022 annual forecasts and medium-term objectives confirmed
Despite the long-running Covid-19 pandemic, persistent supply chain bottlenecks and the consequent increase in the cost of materials and energy, which have been further amplified by the war of aggression in Ukraine, the Koenig & Bauer Group (“Koenig & Bauer”) entered 2022 on an optimistic note. In addition to the P24x efficiency program and an adjusted supply and sales strategy to take into account the current supply situation, this performance was largely supported by Koenig & Bauer’s range of products and solutions, unique in the world. industry because it masters all industrial printing processes on almost any substrate – including corrugated board – and provides software, systems and services for end-to-end printing and finishing processes.
Order intake and revenue well above industry average
In the first quarter of 2022, order intake for Koenig Bauer & Group amounted to 349.1 million euros, up 22.1% compared to the already good figure of 286 million euros recorded the previous year. . This was significantly better than the industry average, which fell 5.9%. At €238.4 million, the Group’s turnover was down slightly compared to the previous year by 2.1%. At 20.0%, however, the decline in industry-wide revenue was much larger. The share of the services business, which is becoming increasingly digital, rose from 28.8% the previous year to 33.9% in the first quarter of 2022. At €917.5 million at March 31, 2022, the order book is up 36.0% compared to the previous annual figure of €674.5 million, up 13.7% compared to the end of the previous year.
“Koenig & Bauer thus held firm in a sluggish economic environment in the first quarter of 2022”, says Dr. Andreas Pleßke, Managing Director of Koenig & Bauer. “Our order intake, which increased by around 22%, shows that, contrary to the assessment of our trade association, the German Association for Mechanical and Plant Engineering (VDMA), we have not yet general restriction of purchases from nervous customers. . With our historically high order book, we see ourselves favorably positioned for the remainder of 2022.”
EBIT improved despite difficult underlying conditions and slightly lower revenues
Koenig & Bauer’s earnings before interest and taxes (EBIT) amounted to -8.5 million euros (previous year: -8.9 million euros). The improvement of €0.4m compared to the same period of the previous year is mainly due to the P24x efficiency program (around €10m) despite the lower recourse to partial unemployment (around €5m), negative volume and mix effects (around €10 million). 1 M) and other negative effects which also include impairment of receivables (approximately 4 M€). The increase in the cost of materials and energy (approximately €6 million) was offset by the price increases announced. Consequently, the EBIT margin improved from -3.7% in the prior year to -3.6% in the first quarter of 2022. Net interest expense of -2.4 million euros (previous year:
-€2.4m) remained at the level of the previous year, resulting in a result before tax (EBT) of -€10.9m, an improvement compared to the figure of -€11.3m recorded in the first quarter of 2021. After income taxes, the net loss decreased from -11.7 million euros in the same quarter of the previous year to -10.5 million euros as of March 31, 2022. This translated into earnings per share of -€0.64 (previous year: -€0.72).
Free cash flow impacted by change in net working capital requirement and high order backlog
Free cash flow amounted to -€30m (previous year: €22.1m). The decrease of €52.1 million is mainly due to changes in net working capital as well as the intensification of investment activities. Net working capital amounted to €308.6m, below the previous year’s figure of €324.8m. Compared to the end of 2021, there was a slight increase of €11.5m, mainly due to the increase in inventories and other assets due to the good order situation. The net financial position amounted to -€27.8m (previous year: -€26m), compared to €2.9m at the end of 2021. Despite a Group equity ratio down slightly by 27.9% ( end of 2021: 28.7%), the The company is financially well positioned thanks to its equity and available cash of more than €250 million.
Double-digit increase in order intake across all segments – revenue paints a mixed picture
In the Sheetfed segment, order intake was particularly strong, up 25.4% thanks to higher orders for sheetfed offset presses and the post-press range. Order intake amounted to €242.1 million. Turnover amounted to €127.4 million (previous year: €145.5 million), down 12.4% compared to the same quarter of the previous year. With a book-to-bill ratio of 1.90 (previous year: 1.33), the order book increased to EUR 556.3 million at the end of the reporting period. At -€3.6m at March 31, 2022, the EBIT loss is slightly up on the previous year’s figure of -€3.1m. As a result, the EBIT margin reached -2.8% (previous year: -2.1%).
In the first quarter of 2022, order intake in the Digital & Webfed segment increased by 31.1% to €30.8m (previous year: €23.5m), mainly due to the services activities and the application for corrugated board presses. At 28 million euros, turnover is 8.2% lower than the figure of 30.5 million euros for the previous year. The order book increased by €30.7m to €91.3m (previous year: €60.6m). In addition to the restriction of customer purchases related to the pandemic, EBIT was also pressured by start-up costs and product improvement expenses, reaching -6.1 million euros (prior year: -4.3 millions of euros). As a result, the EBIT margin amounted to -21.8%, compared to -14.1% in the same quarter of the previous year.
At €81.7 million, order intake for the Special segment at March 31, 2022 was up 11.3% compared to €73.4 million the previous year. Orders for Banknote Solutions (banknote and security printing) and Coding (marking and coding solutions for all industries) increased. On the other hand, orders received by MetalPrint (metal packaging) and Kammann (direct decoration of hollow glass, plastic or metal bodies) fell. Turnover increased by 24.6% to €91.3 million (previous year: €73.3 million). The order book also increased to 268 million euros (previous year: 237.5 million euros). EBIT fell from -€3.9m to -€0.7m. The EBIT margin reached -0.8%, compared to -5.3% in the same quarter of the previous year.
Koenig & Bauer’s sustainability goals take current energy concerns into account
The sustainability targets already achieved by Koenig & Bauer are a good starting point for intensive work on further projects to cope with the continuing increase in energy costs and the prospect of an interruption in the supply of energy. gas. From 2024 at the latest, it will, for example, switch to largely carbon-neutral district heating using green energy at its Radebeul site. The supplier GETEC mainly relies on biomass from wood pellets and also on solar thermal energy for the supply of district heating. In addition to the photovoltaic systems installed at the Radebeul and Mödling sites, Koenig & Bauer is also studying other projects to extend its in-house electricity production capacities. At the Lausanne site, it is planned to cover approximately 20.0% of basic electricity needs via a photovoltaic system installed on the roof by the owner of the land. In Würzburg, the possibility for the site to cover its own electricity needs by means of photovoltaic systems or other renewable energy sources is being studied. In addition, around 8% of the gas consumption at the company’s headquarters can be replaced by using waste heat from the foundry’s new melting furnace.
2022 annual forecasts and medium-term objectives confirmed
The conditions for the second quarter of 2022 are also subject to uncertainties, such as the prolonged global Covid-19 pandemic, which, for example, led to the closure of the port of Shanghai, the conflict between Russia and Ukraine, delays extended lead times and the corresponding increase in the cost of materials, reduction in transportation capacity and rising energy costs. A reliable forecast for the whole of 2022 is not possible on the date the quarterly statement is drawn up. As a result, Koenig & Bauer continues to anticipate a slight year-on-year increase in Group sales and EBIT operating margin in 2022 and confirms its medium-term sales targets of 1.3 billion. euros, an EBIT margin of at least 7% and a reduction in net working capital to a maximum of 25% of annual turnover, which must be achieved after the completion of the P24x efficiency program.
Dr Stephen Kimmich, CFO of Koenig & Bauer AG: “Although we would all have liked more visibility after the first quarter of 2022 in order to offer reliable details for our 2022 forecast, this should not distract us from what we have. achieved, given that in the first quarter we were able to fully absorb the partly unpredictable material and energy costs of around 6 million euros The outstanding orders from our customers and the good progress we are making with our P24x efficiency program provide further support, so we are confident that we will meet our targets for 2022 and beyond.
The financial statements can be downloaded as a PDF file from here.