Press maker KBA warns Heidelberg bailout is forcing prices down

Prices for printing presses have plunged to dangerously low levels because of government bailouts for some manufacturers, German group KBA has warned.

In preliminary results for last year which showed that the company had broken even despite the year's weak demand, the German group roundly criticised the effect of government aid on the market for presses. KBA has not received any state aid to help it through the recession. However, its comments are a clear reference to the the EUR 850m German government bailout of rival Heidelberg last June.

The statement from KBA said that management was "deeply concerned that other companies appear to be using state aid to preserve excess capacities by building for inventory and selling off stock at deep discounts". It said that the price of both new and second-hand equipment had been "seriously undermined" and that the slump in prices was counteracting the benefits of consolidation. "Such behaviour harms the entire industry and demonstrates once again that state for individual companies can distort competition for the rest of the field. Jobs secured at the tax-payer's expense are ultimately lost elsewhere," the company said. Despite the slowdown in demand, KBA said it was anticipating a post-tax profit for 2009. This compares to the pre-tax loss of EUR 87.1m it posted in 2008.

It reported a 40% drop in demand compared to 2007 but said that a raft of cost-cutting measures, including shedding more than 1,000 jobs, had reduced overheads by more than EUR 100m. A further 700 jobs are set to go this year, bringing the overall headcount to 6,300, the company said. The biggest area for job losses has been in the heavily restructured sheetfed press division.

Group orders for 2009 were down 28% at EUR 890m, while sales were 31% down at EUR 1.06bn. The company said that demand for web presses was weaker than expected, while sheetfed still delivered a loss, but a far narrower one than the previous year.
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( Source: Packaging News )