Release Date: March 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Koenig & Bauer AG (WBO:SKB, Financial) achieved a record order intake of over €1.4 billion, the highest in the last 10 years.
- The company reported a strong free cash flow of €31.6 million for the full year, marking a significant improvement.
- The Spotlight program has been largely implemented, with 80-85% of measures in place, leading to significant cost savings.
- The company maintained a strong order backlog of €1.04 billion, providing a solid foundation for future growth.
- Koenig & Bauer AG (WBO:SKB) successfully reduced its net working capital to 23.1% of revenue, meeting its long-term target.
Negative Points
- The company reported a significant net loss of €69.8 million for the year, primarily due to one-time costs from the Spotlight program and Drupal expenses.
- Revenue decreased by 3.9% year-over-year, reflecting challenges in the market.
- The digital and web segment continues to face challenges, with ongoing losses expected until 2026.
- The company's shareholders' equity decreased from 28.7% to 23.3%, indicating a weaker financial position.
- Potential US tariffs pose a risk to demand and could impact future growth, particularly in the North American market.
Q & A Highlights
Q: Can you explain the reconciliation line that includes around €60 million in operating results for 2024?
A: This is related to the holding charges. The holding charged out more to the business units than it costed, resulting in a profit for the Koenig & Bauer AG Holding. This benefit will be shown in the segments in 2025, but for 2024, it had to be shown in the consolidation line due to auditing purposes. Analysts should allocate this benefit roughly based on sales to the segments.
Q: How are tariffs affecting your contracts, especially with the expected growth in the banknote segment?
A: In our commercial business, the risk of tariffs is minimal, with most contracts placing the tariff burden on customers. The banknote business, being B2G, involves the US government as a partner, making it a different situation. Currently, banknote orders are proceeding as planned without tariff-related issues.
Q: Where do you see growth coming from to achieve your 2026 targets?
A: Growth is expected to be balanced between the paper and packaging segment and the special and new technologies segment. Areas like post-press, digital printing, and corrugated large format in paper and packaging, as well as digital web in special technologies, are expected to contribute to growth.
Q: Do you expect to achieve positive free cash flow in 2025 despite the Spotlight program cash outflows and low inventory levels?
A: Yes, we expect positive free cash flow for 2025. We will continue to manage working capital and investments strictly, aiming for a positive net income and cash flow, although it may not be significant.
Q: What is the expected cash-out effect from the Spotlight program in 2025?
A: Approximately €15 million of cash out is expected from the Spotlight program in 2025. Most of the €50.5 million total impact has already been accounted for in 2024 or through previous write-offs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
