In the past decade, the major or better known manufacturers of sheetfed offset presses Heidelberg, KBA, Manroland Sheetfed, Komori and Ryobi-Mitsubishi have been through a major cycle of losses, restructuring of human resources (retrenchment) and divestment and consolidation. Has the industry bottomed out and out of hot water?
Two questions emerged when IppStar (www.ippstar.org) seriously looked at the financial and other data of the major sheetfed press manufacturers: the first is whether the industry has really bottomed out since losses and human resources have been reduced; the second is that of the future shape of the market and whether it can sustain all of these manufacturers. We have tried to look at the information emerging for these companies and tried to normalize it for the 2013 financial year although some companies’ publish information January to December and others from April to March. As far as possible, we have stripped the press sales information from sales of spare parts and servicing sales to produce our own educated guesstimates.
Heidelberg
In 2009 Heidelberg lined up a combined credit of Euro 1.4 billion to be repaid by the middle of 2012. The credit line included loans backed by Germany’s federal and two state governments, the German KfW (the bank for reconstruction of large companies) and from a syndicate of private banks. After enhancing its equity, the company repaid the KfW ahead of schedule by the end of 2010.
By the third quarter of 2013-14, this allowed Heidelberg to firm up and push its financial framework into the future. At that point its syndicated credit line stood at Euro 340 million and a Euro 60 million in Euro convertible bond (both due to mature by mid-2017); and, a bond for Euro 355 million that matures in April 2018.
Manroland Sheetfed
Manroland web and sheetfed went through insolvency in late 2011, and in early 2012 emerged as two companies
— the web division being acquired by the German Possehl group and the sheetfed division being acquired by the British Langley Holdings engineering group. Albeit with lower sales figures, Langley-owned Manroland Sheetfed showed a small profit profit in 2013. Tony Langley says that after restructuring, Manroland Sheetfed with its 1,640 employees can break-even with sales of just 100 presses a year. This sales figure was slightly exceeded in 2013 and should also be achieved in 2014. Langley says the company has continued to invest in research and development and will launch a new series of presses in 2015.
Ryobi-MHI Graphic Technology
In 2013, Mitsubishi and Ryobi started working together and combined their respective sheetfed offset manufacturing and sales operations in a joint venture company that began
operation from 1 January 2014. While this gives the integrated manufacturing entity a large range of press sizes, new distribution and sales channels could take time to show results.
KBA
Only Komori and KBA have roughed it out by minimizing their expansion and manpower. At KBA’s annual general meeting on 28 May 2014, CEO Claus Bolza-Schunemann said, “We are convinced that we will be able to harvest the fruits of our realignment in 2015 and that the group will return to sustainable profitability by 2016 at the latest.” Part of this continued realignment is the plan to cut from from 1,100 to 1,500 jobs by the end of 2015 from the current figure of approximately 6,200.
The current employment figure is higher than that of the previous year because of KBA’s acquisition of KBA-
Kammann in Germany and
Flexotecnica in Italy in 2013. KBA reported in May that in Q1 of 2014 new orders of sheetfed offset presses were up 10.3% to Euro146.5 million compared to Euro 132 million in Q1 2013. Sheetfed order intake also rose in double digits.
Komori
Komori alone of all the major press manufacturers has no long term debt and it has shown a bounce back to real profit after three years of poor results. In the financial year ending March 2014, it has shown a profit of approximately US$ 130 million in contrast to its loss of about US$ 20 million in 2013. From 2010 to 2104, Komori reduced employment from 2,190 to about 1,780. Although it projects a modest increase in sales in the coming year, Komori is alone amongst all the sheetfed manufacturers in its projected increase of employment this year to1,846.
Asian manufacture, adaptation and evolution
There are several Asian manufacturers of sheetfed offset presses including Hans Gronhi, Beiren and Shanghai Electric Printing and Packaging Machinery in China and Autoprint in India. In the past decade, SEG-PPM purchased Japanese Akiyama, Hans Gronhi acquired Shinohara of Japan, and Qingdao began manufacturing the Solna sheetfed and there are many other offset press manufacturers in China. Heidelberg’s plant near Shanghai has also expanded its activities in the past several years to bigger format presses.
Although the printing industry in the developed economies can no longer afford to buy offset presses in the volumes that they used to, their purchases currently represent 65 to 70% of new sheetfed press sales. In these regions the print businesses now have to mix and match a number of types of work and technologies, length of runs and a variety of services and value additions in order to survive and prosper.
Like any species a great deal of adaptation and evolution is taking place but the overall paradigm is that of new enhanced capabilities with increased automation. Printers have to sell innovation while also producing traditional products efficiently. In fact the biggest efficiency seems to be to offshore and outsource printing to India and China or for the larger print business groups, to at least invest in new growth regions.
Sales growth and profitability
Sheetfed press sales in the first decade of the 21st century have been roughly in the ratio of 70% to North America, Europe and Japan; 20% to China, and 10% to other regions including Latin America, Africa and Asia. According to IppStar’s estimate new offset sheetfed press sales in 2013 globally, were of the order of Euro 1.5 billion.
All the major manufacturers are projecting three things in their forecasts — growth in the China, Asia, Africa and Latin America regions in the coming years; growth in the packaging segment in the coming years; and sales growth and profitability in the coming years or at least in 2015 or 2016.
However, it is unlikely that theoverall sales piecangrow to suchanextent simply becausethegrowthregions cannotgeneratethelevel of demand thatwill absorb thede-growthinthe developedeconomies. Theseregions may need printbutthequestionis whetherthereis demand forprint.
Moreoveratthecurrentprices of these machines andthevalueandprofitthey generateinemerging andless developed economies, arethey affordable?
Competitive prices
Given the progress that digital printing (especially the next generation of sheetfed inkjet presses) is making in commercial printing and also for labels, paperboard and flexible packaging, IppStar expects the global sheetfed offset market for new presses to shrink by almost 50% overall in spite of fairly strong growth in China and the rest of Asia, Africa and Latin America.
The forecast till 2020 is based on China increasing its purchase of new offset presses by 50% in this seven year period, the rest of Asia, Africa and Latin America doubling its purchases or an increase of 100% while the developing economies decrease their purchases by almost 30%. This decline in press purchases will not mean a decline in capacity since new presses with automation and other enhancements are likely to actually increase overall capacity and efficiency to meet the growing demand for print and packaging in the currently less developed or lower print consuming regions. Most of the sheetfed press manufacturers are developing digital presses of their own or in collaboration with established vendors as the next generation of digital print technology promises a better quality-speed-volume and price performance equation.
To our view, a large amount of restructuring and consolidation has already happened in Japan. However in Europe it is likely that further consolidation and rationalization of manpower is needed although there has been some restructuring and shifting of manufacture to China. This means that in coming years will yield relatively competitive prices for excellent presses. But price competition is a double-edged sword — it won’t be too clever to get a great price from a manufacturer that goes out of business because it sells and services high technology offset presses at a loss.
