In his letter to shareholders published alongside Koenig & Bauer’s first-half results, Claus Bolza-Schünemann said the business had taken “careful note” of the recent financial releases from listed competitors Heidelberg, Bobst and Komori.
“In general, we believe that price cuts to expand or maintain market shares in limited markets, which can at most be subject to macroeconomic fluctuations, is the wrong concept,” Bolza-Schünemann stated.
“We are not aware of any capital goods market in which a competitor successfully – meaning that it resulted in profit growth – added market share through price cuts. On the contrary such an approach always weakens the margin and thus also the innovation and future sustainability of the company.”
At the end of last month K&B reaffirmed its financial targets for the year despite both Bobst and Heidelberg downgrading their own expectations.
Bolza-Schünemann concluded: “The only, and in our view most logical way to deal with fluctuations in demand is active and fast cost structuring while continuing to work on innovative products which enable customers to realise tangible added-value.”
In the first six months of the year order intake at K&B fell from €705.3m (£642.6m) to €573.3m, while order backlog was down by €127.6m at €678.2m. Sales slipped from €514.4m to €506m. The prior year figures had been boosted by a huge order for security presses for banknote production in Egypt.
At its divisions, Sheetfed orders grew by 4.8% to €329m following a successful Print China, but costs associated with attending the expo helped propel the division into the red with a €1.2m loss compared to the prior year’s EBIT of €8.1m.
The Digital & Web division grew its order intake to €89.9m thanks to gains in flexible packaging, newspapers and digital décor printing, although revenue in the services business for existing web and newspaper presses declined. Losses grew from €9.9m to €11.1m.
K&B’s Special presses segment saw a steep drop in orders due to the prior year’s huge Egypt order, with bookings nearly halving at €174.5m. “Major orders of this scope are unusual, even in security printing,” the company reported. “In a highly-competitive environment with sometimes massive concessions from the competition, we were not able to succeed in all security printing tender awards.”
Overall group earnings before interest and taxes fell from €10.6m to €600,000, and K&B posted a net loss of €2.4m (2018 net profit: €6.7m).
K&B said it was focused on market opportunities across a range of markets including corrugated board, carton printing, flexible packaging, two-piece can printing, décor, coding and direct-to-glass.
The group has high hopes for its single-pass inkjet joint venture with Durst for corrugated and carton printing.
Shares in K&B fell by 3.78% to €35.10 on the announcement (52-week high: €67.30, low: €33.10).
In the statement, K&B's management report also raised the issue of its currently low share price, and said: "Considering the earnings level that has been achieved and the potential from the growth offensive 2023, we are anything but satisfied with the price development of our share and are working intensively on a valuation that takes into account the profitability and opportunities of our company."
