Koenig & Bauer is putting in place actions intended to reinforce its position in core markets, and to improve the earning power of the group.

The principal market segments addressed by Koenig & Bauer, such as the structurally expanding areas of packaging and industrial printing, remain ‘fundamentally intact’, the company noted. This is demonstrated by good levels of capacity utilisation currently reported by printers of packaging for food products, beverages, and pharmaceuticals, as well as e-commerce. Despite this, Koenig & Bauer noted that some customers are postponing new investments due to ongoing uncertainty brought about by Covid-19.

To reinforce the company’s position as a leading supplier of press and post-press technologies for packaging, industrial and security printing applications, and to boost earning power, the company’s management board has been working intensively on developing and expanding its ‘Performance 2024’ efficiency programme.

The primary objective of the four-year, multi-pronged Performance 2024 programme is to strengthen the company’s competitiveness for the long-term. A range of measures aim to ensure further development of the product range in accordance with market needs, to continue with the digitalisation of processes, and, at the same time, achieve reductions in manufacturing costs. Koenig & Bauer continues to focus on end-to-end systems and optimisation of the total cost of ownership (TCO) for the customer, while investments in digital print and direct post-printing on corrugated board are ‘being pursued with vigour’, as is the joint venture with Durst. New developments in security printing are also in the pipeline.

Alongside increased efficiency, Performance 2024 aims to scale group activities, as the global economic situation, travel restrictions and worsening Covid-19 developments suggest there will only be moderate turnover growth in the next few years, and a short-term return to pre-crisis levels is not anticipated.

The programme adopted provides for the following:

  • Supply chain reorganisation, effected by changes to group-wide structures, purchasing arrangements and production processes within the framework of one organisation, as well as innovative approaches to part and component optimisation;
  • Adjustments to cost and personnel structures, and improvements in productivity based on process streamlining and standardisation;
  • Increased effectiveness and efficiency in development and design by implementing measures targeting product, process and organisational optimisation, such as design-to-cost projects;
  • Continuation and acceleration of the development of new products and solutions for the fields of sheetfed and webfed packaging printing by means of conventional and digital printing technologies, hollow container decoration, post-press and banknote production;
  • Reduced administration costs by continued pooling of specific tasks as shared services, as well as changes to sales and service structures; and
  • Optimisation of the production and assembly factories, including internal pooling within the group, and the relocation and realignment of production and assembly facilities.

Professor Dr Raimund Klinkner, chairman of the Koenig & Bauer supervisory board, commented, ‘The Performance 2024 programme is laying the foundations for a profitable development of the company, which builds upon interesting future opportunities for new markets and technologies.’

There are also plans to realise annual cost saving effects that will then amount to more than €100 million and continue increasing until 2024, while maintaining and accelerating innovation, process and product developments.

The effects of the short- and medium-term measures will bear fruit in the period from 2021 to 2024, whereas a continued negative impact on business results is expected in the third and fourth quarters of 2020 due to the Covid-19 pandemic.

Upon conclusion of the programme, turnover at the Koenig & Bauer Group is expected to reach around €1.3 billion. On the earnings side, the management board hopes that implementation of the approved cost and structural adaptations will help maintain a return on sales totalling at least 7% over the medium term, while reducing working capital requirements to an average level of 25% of annual turnover.

In addition to the effects of the measures already being implemented, such as cutting back on overtime and subcontracted labour, a hiring freeze and short-time working, the group-wide measures now approved will affect between 700 and 900 jobs in the short and medium term. The changes will be discussed and negotiated with employee representatives and social partners over the coming months. Along with implementing the necessary measures in a socially acceptable manner, the objective is to achieve a return to the planned level of group growth in the medium term by taking innovative approaches.

Koenig & Bauer president and CEO Claus Bolza-Schünemann said, ‘Today, we have made far-reaching decisions for Koenig & Bauer, made necessary by negative global economic developments in tandem with ever-changing customer needs and demands. They are also associated with painful cuts for the workforce. These difficult and challenging steps were not easy to take, but they are imperative to safeguarding the long-term future of our 203-year-old company.’