German rivals voice concerns over Heidelberg's 'government bailout'

19 June 2009

Business

Press manufacturers KBA and Manroland have both voiced concern over a state bailout that is to be handed to rival Heidelberg, reported to total 850m euros (720m).

The two companies spoke out after German authorities agreed to grant Heidelberg a €300m loan and to provide guarantees for the majority of around €500m financing line.

Speaking at KBA's AGM, Helge Hansen, the manufacturer's new chief executive, said KBA was "concerned about possible competitive imbalances" following Heidelberg's application for state support.

The concerns voiced by Hansen reflect unease among rival manufacturers about the advantage that Heidelberg would be given after the imminent receipt of up to €800m of state aid in the form of loans and loan guarantees.

Speaking at a media event for the Print 09 trade show in Chicago, Illinois, Manroland US chief executive Vince Lapinski also expressed similar concern about the state support being provided to Manroland's biggest competitor.

"An €850m bailout for a leading supplier to the printing industry is very serious," he said.

Lapinski added that Manroland was "financially stable" and said the company would not be applying for any German state-funded aid.

While KBA has applied for a government guarantee effective from next April, Hansen claimed that the company had no need for a "state prop" in reference to media reports on the German press manufacturing sector and Heidelberg in particular.

He warned against generalisations and emphasised KBA's strong financial and liquidity base.

"At present, we have no bank debts. On the contrary, in recent months we have improved our net financial position to a good €36m and our operative cashflow is positive," he said.

One rival, who did not wish to be named, told PrintWeek: "There are times when life just doesn't seem fair."

At KBA's AGM, Hansen said the volume of new orders at the group was "well below" the target for the year.

"At present the only bright spot is the security printing sector," he said.

However, the pace of the decline in sales is slowing with a 20.7% decline in new orders for the first five months of the year, significantly better than the Q1 year-on-year fall of 40.7%.

Hansen said: "Following last year's substantial loss, we have a real chance of achieving our ambitious goal of posting a balanced result, even if sales are just shy of €1.2bn."