Koenig & Bauer achieved profitable growth in 2022, exceeding its own EBIT forecast as well as market expectations in a challenging environment.
“Our performance last year shows that we are headed in the right direction for sustainable growth. We were able to post increases in all key performance indicators,” says Andreas Plesske, chief Executive officer of Koenig & Bauer, expressing his satisfaction with the full-year figures achieved in a challenging environment. Plesske adds, “That is why we have deliberately chosen the motto “Metamor[e]phosis” for our annual report. It reflects the fact that it is both the company’s maxim and part of its DNA over a history spanning more than 200 years to constantly evolve, highlights the importance that we have always attached to adaptability, and shows how our ‘exceeding print’ strategy and our P24x efficiency program are enabling us to master the necessary transformation.”
All three segments contributed to the 6.3% increase in group revenue
Group revenue increased by 6.3% to 1,185.7m Euros in 2022, thus reaching the upper end of the range of 1,160 – 1,190m Euros that had been specified in November. One Euro is equivalent to US $1.08. As in the previous year, almost 30% of revenue was generated by service businesses. All three segments contributed to this increase, with Digital & Webfed even posting double-digit growth. In the fourth quarter of 2022 in particular, Koenig & Bauer achieved a significant increase over the same period in the previous year, with revenue coming to 380.0m Euros (previous year: 328.4m Euros) and EBIT to 25.0m Euros (previous year: 11.8m Euros).
In cumulative terms, earnings before interest and taxes (EBIT) amounted to 22.0m Euros, exceeding both the company’s concrete forecast of 15 – 20m Euros (EBIT margin: 1.3% – 1.7%) and market expectations (previous year: 28.5m Euros; 2.6%). The EBIT margin stood at 1.9%. Allowing for the adjustment of around 23m Euros to the P24x restructuring provisions in the previous year, Koenig & Bauer was thus able to improve its operating profitability substantially. In particular, the main drivers of this performance were the more efficient response to the challenges posed by supply-chain and capacity constraints as well as the success of the measures implemented in the efficiency program. On the other hand, there was a massive rise in raw material and energy prices, which it was not possible to pass on to customers in full or only with a delayed effect by means of the price increases announced or implemented.
After net interest expense of –8.8m Euros, earnings before taxes (EBT) came to 13.2m Euros. After income taxes of –2.1m Euros, the Group posted a net profit of 11.1m Euros in 2022, equivalent to earnings per share of 0.63 Euros.
At the end of 2022, the Koenig & Bauer Group’s order intake stood at 1,329.3m Euros, up 3.0% on the previous year’s already good figure. The book-to-bill ratio of 0.8 in the fourth quarter was also in line with the company’s forecast. The order backlog reached 950.4m Euros, substantially exceeding the previous year’s figure.
Digital & Webfed with substantially improved earnings
The digital and webfed segment reduced its negative earnings contribution substantially in 2022, posting EBIT of –19.3m Euros on revenue of 139.8m Euros. By comparison, EBIT had stood at –38.5m Euros in 2021, reflecting the negative impact of the adjustments of roughly €6m to the P24x restructuring provisions. With its promising business in industrial digital printing, the versatile corrugated board sector and the growing market for flexible packaging, the segment thus achieved a significant improvement in earnings. Revenue in the sheetfed segment climbed from 642.4m Euros to 672.2m Euros, driven by growth in sheetfed offset presses and the postpress range. Segment EBIT came to 19.0m Euros (previous year: 24.0m Euros), meaning that it is still on a profitable growth trajectory. In the previous year, EBIT had been boosted by around 9m Euros due to the adjustments to restructuring provisions for P24x. The Special segment generated revenue of 417.1 m Euros in 2022 (previous year: 390.2m Euros), achieving EBIT of 23.2m Euros (previous year: 34.9m Euros). In the previous year, EBIT in this segment had been boosted by around 18m Euros due to the adjustments to the P24x restructuring provisions.
Sustainability as a brand core
On sustainability, the company is working on steadily improving. In keeping with this, Koenig & Bauer assumed responsibility for greater climate protection in the year under review, taking significant steps on the road toward carbon-neutral production. Moving forward, the company will be covering part of its own electricity requirements sustainably by means of on-site production. This will not only help to improve our climate footprint but also provide a self-sufficient source of energy. Under its ‘exceeding print’ Group strategy, Koenig & Bauer is working on adopting fully carbon-neutral processes in terms of Scope 1 and 2 emissions at its production plants by 2030. Customers are also benefiting from the fact that Koenig & Bauer is setting new standards in both digitization and energy management, one example being the new energy management system developed by the digital unit. However, the Company not only wants to be a sustainability pioneer itself but also motivates other market participants to follow it on this path. Reflecting on this, Koenig & Bauer presented the Green Dot Award in 2022, which had been specifically created for this purpose. In this way, Koenig & Bauer wants to honor each year a visionary leader with outstanding ideas who have made innovative contributions to sustainable printing in a special way. Koenig & Bauer also sees itself as having an inherent responsibility as a corporate citizen to look outside the box and, where necessary, to help the most vulnerable in society.
Outlook 2023: growth expected in a difficult macroeconomic environment
The current year will see a continuation of the massive effects of the Russian war against Ukraine, the unchanged high energy and commodity prices and the tighter monetary policies of international central banks in response to inflation rates above the target corridor, the company said. The economic headwinds will thus remain strong, with macroeconomic growth continuing to lose momentum. Despite this challenging macroeconomic environment, Koenig & Bauer projects group revenue of around 1.3bn Euros, accompanied by an EBIT margin of roughly 3%, for 2023, and expects the Digital & Webfed segment to make a disproportionately large contribution to both EBIT and revenue growth. “With our strong position in promising product segments and the continuation of our P24x efficiency program, we are well poised to address the challenges ahead of us,” comments CFO Stephen Kimmich, adding, “We have done our homework and showed last year that we can achieve growth even in a difficult environment.”