In order to strengthen its position as leading supplier in packaging, industrial, security printing and postpress, as well as to increase the operating profitability of the Koenig & Bauer group, the company's executive board has developed and expanded the Performance 2024 efficiency programme over the past few months. By continuing and accelerating all innovation processes, product and process developments, annual cost savings of over EUR100m should increasingly be achieved until 2024. The corresponding one-off costs in the mid double-digit million range will be recognised as expenses via a provision in the group income statement of the 2020 financial year. The supervisory board was closely involved in the evaluation process and, after detailed consultation and extensive discussion, unanimously approved this programme in its meeting today.
The four-year programme is primarily aimed at strengthening competitiveness in the long-term with a series of measures. Through a large number of initiatives, the machine programme is being further developed in line with market needs, processes are being digitised and manufacturing costs are being reduced at the same time. Koenig & Bauer continues to focus on integrated system solutions and the optimisation of the total cost of ownership (TCO) for customers. In particular, investments in direct corrugated board and digital printing as well as the joint venture with the Durst group will be driven forward. New developments for security printing are in progress. Koenig & Bauer confirms the current product portfolio and will consistently expand it. The further digitisation of the service offerings is also in the focus.
The end markets primarily addressed by Koenig & Bauer, such as the structurally growing packaging and industrial printing, are fundamentally intact. This is clearly reflected in the currently high capacity utilisation of packaging printers for foods, beverages, pharmaceuticals and booming online trade. In view of the numerous uncertainties resulting from the Covid-19 pandemic, however, customers are postponing new investments. In addition to increasing efficiency, the performance programme aims also to scale the group, as in the next few years, due to the global economic situation, the continuing travel restrictions and the worsening Covid-19 developments, only moderate revenue growth and no short-term attainment of the pre-crisis revenue level are expected.
The short and medium-term measures will take effect from 2021 to 2024. For 2020, the worsening international course of the Covid-19 pandemic is expected to have a negative impact on business performance in Q3 and Q4. In addition, the intended introduction of a new internal guideline for revenue accounting in the Sheetfed segment in 2020 will cause a one-off balance sheet shift of EUR40-60m revenue and EUR9-12m EBIT to 2021.
After completion of the programme, the Koenig & Bauer Group should achieve a revenue level of around EUR1.3bn. On the earnings side, after implementing the approved cost and structural adjustments, the management board is still aiming for a return on sales of at least 7% in the medium-term and a reduction in working capital requirements to an average of 25% of annual revenue.
The programme adopted today provides for the following details:
- Change of the supply chain organisation by adapting the group-wide structures, processes of procurement and production in one organisation as well as innovative approaches to parts and component optimisation
- Adjustment of cost and personnel structures as well as improvement of productivity through process streamlining and standardisation
- In development and construction, increase in effectiveness and efficiency through product, process and organisational optimisations such as design-to-cost projects
- Continuation and acceleration of the development of new products for the areas of packaging in sheetfed and web-fed printing with analogue and digital printing technology, hollow container decorating and solutions for postpress and banknote production
- Reduction of administration costs with further bundling of tasks as shared services, adaption of sales and service structures
- Optimisation of the production and assembly sites including the group-internal bundling, relocation and realignment of production and assemblies.
In addition to the ongoing measures such as reducing overtime and temporary work, hiring freezes and short-time work, between 700 and 900 jobs in the group will be affected in the short and medium-term from the measures adopted today. The adjustments will be discussed and negotiated with the employee representatives and social partners in the coming months. In addition to the necessary socially responsible cutbacks, the goal is to achieve a medium-term return to the planned group growth through innovative methods.
Koenig & Bauer AG
|Contact Person:||Dr. Bernd Heusinger|
|Phone:||+49 931 909-4835|
|Stock Exchange(s):||Regulated Market in Frankfurt, Munich; Free Market in Berlin, Dusseldorf, Hamburg, Hannover, Stuttgart, Tradegate|