The German press manufacturer has issued a profit warning in light of “much lower sales volume than expected” in both its web and sheetfed business segments in the third quarter.
As a result of the Q3 shortfall, which it attributed to “economic and market development”, KBA said that its previous full-year sales and earnings targets would no longer be attainable.
The group’s initial target of annual sales of €1.3bn in 2013 has therefore been downgraded, with KBA’s management now estimating that revenues will fall €200m short of that target at approximately €1.1bn.
While KBA still expects its operating result excluding special items to be positive, it said it now expects its pre-tax and net result after restructuring costs and impairments to be negative.
“Given reduced sales, anticipated extraordinary expenses for impairments and restructuring measures, it is likely that KBA will post a loss for 2013,” the company said. “Excluding the special items mentioned, management continues to target a positive operating result and balanced Group earnings before taxes.”
The group’s share price fell sharply on the news, dropping 10% to €12.85. It subsequently recovered to €13.00 (52-week high: €18.85).
The announcement marks a mixed 12 months for the manufacturer, which this time last year announced double-digit operating and pre-tax profits, reversing the previous year’s nine-month loss, on the back of a 34.1% increase in web sales, which counteracted a €21.4m loss from the sheetfed division.
However, since then KBA has suffered from a slowdown in web sales, leading to the restructuring of the division – including the closure of the Trennfeld site in December 2012, while its sheetfed division has continued to struggle.
This has led to the worsening group position, as seen in KBA’s half-year results, where an operating profit of €4.5m from web and special press sales in H1 2013 was insufficient to counteract the €9.4m operating loss from sheetfed press sales.
Compare that with 2012, where KBA returned a profit for the half-year in spite of a much larger sheetfed operating loss (€18m) because its web and special presses division returned a sizeable €30.5m operating profit.
Earlier this year, KBA announced a 2.5% price increase for sheetfed presses from 15 April 2013 while it also signed a deal with union IG Metall that protected jobs until mid 2015 in exchange for changes to working hours (in place until the end of 2014).