Koenig & Bauer : Statement First Quarter 2024

Metamor[e]phosis

Statement | First Quarter 2024

Statement Q1 2024

Index

3 Q1 at a glance

4 Group figures

5 Business environment

6 Earnings, finances and assets

11 Performance of the segments

12 Risks and opportunities

13 "Spotlight" focus programme

15 Outlook

16 Additional information

2

Statement Q1 2024

Q1 at a glance: Koenig & Bauer reporting its figures for the first quarter of 2024 and announcing further details of the "Spotlight" focus programme

• As expected, Group revenue of €253.2m (previous year: €281.0m) and EBIT of €-10.2m (previous year: €-3.2m) in the first quarter of 2024 lower than in the previous year in a challenging market environment

• Sheetfed with an encouraging sequential improvement in order intake, Digital & Webfed

with a slight increase in revenue, Special set to benefit from a high order backlog asthe year continues

• "Spotlight" focus programme particularly aims at enhancing earnings and efficiency in the Digital & Webfed and Special segments and requires governance adjustments

• Further "Spotlight" measures planned for Group-wide projects and at the Holding

• Improvement in free cash flow achieved

• At €242.9m as of 31 March 2024, order intake was 19.4% below the previous year'sfigure, in line withexpectations

• Strong order backlog of €901.2m (previous year: €970.6m) provides a solid basis for further growth in 2024

• The overall book-to-bill ratio stood at 0.96 in the first quarterof 2024, just belowthe previous year's figureof1.07

• Outlook for 2024 confirmed: operating EBIT margin and revenue stable at the previous year's level; "Spotlight" will also help the Group achieve its EBIT margin target of 6-7% by 2026 on Group revenue of €1.5bn

3

Statement Q1 2024

Group key figures

in €m	Q1 2023	Q1 2024	Change
Order intake	301.2	242.9	-19.4%
Revenue	281.0	253.2	-9.9%
Earnings before interest and taxes (EBIT)	-3.2	-10.2	-218.8%
EBIT margin	-1.1%	-4.0%
Net group loss	-5.7	-16.6	-191.2%
Earnings per share in €	-0.34	-1.01	-197.1%
Free Cashflow	-33.4	-3.2	90.4%
in €m	31.03.2023	31.03.2024	Change
Order backlog	970.6	901.2	-7.2%
Net Working Capital	342.5	362.1	5.7%
Net financial position	-99.8	-148.6	-48.9%
Employees	5,542	5,673	2.4%
in €m	31.12.2023	31.03.2024	Change
Balance sheet total	1,427.1	1,456.6	2.1%
Equity	410.0	393.7	-4.0%
Equity ratio	28.7%	27.0%

4

Statement Q1 2024

Business environment

The global economy remains remarkably resilient, with growth remaining stable, while inflation is returning to target levels, writes the International Monetary Fund (IMF) on 16 April 2024 in its latest global economic out- look. Despite many "gloomy forecasts", the world has been spared a reces- sion, the IMF's chief economist comments, while also referring to lasting problems. "Inflationary trends are encouraging, but we are not yet where we need to be," says Pierre-Olivier Gourinchas, adding that, on a positive note, the high inflation did not trigger an uncontrolled wage-price spiral. Nevertheless, global economic growth is historically weak according to the IMF. This is due, for example, to short-term factors such as higher borrow-

ing costs and the ongoing fallout from the war in Ukraine as well as the

pandemic. However, the IMF also sees risks that may place a damper on

growth. New price increases in the wake of geopolitical tensions could lead

to permanently higher key interest rates. The IMF also warns that mount-

ing geopolitical fragmentation across supply chains could result in both

lower growth and higher inflation. If growth in China stalls permanently,

this could also have an adverse effect on the country's trading partners, according to the fund.

The IMF forecasts global growth of 3.2% this year, citing, among other

things, the resilience of the economy in the United States and in a num-

ber of emerging markets as reasons. It has thus revised its global growth

forecast slightly upwards since January. For Germany, the IMF forecasts

the weakest growth of all the leading western G7 industrialised countries

this year. Leading economic research institutes expect even slower growth of 0.1% for Germanyin the current year.

IWF: Year-on-year gross

	2023	2024	Deviation to
Country/region		Estimate	January 2024
Global	3.2	3.2	0.1
Developed economies	1.6	1.7	0.2
Eurozone	0.4	0.4	-0.1
Germany	-0.3	0.2	-0.3
France	0.9	0.7	-0.3
Italy	0.9	0.7	0.0
Spain	2.5	1.9	0.4
United Kingdom	0.1	0.5	-0.1
United States	2.5	2.7	0.6
Japan	1.9	0.9	0.0
Emerging markets and developing countries	4.3	4.2	0.1
ASEAN*	4.1	4.5	-0.2
Brazil	2.9	2.2	0.5
China	5.2	4.6	0.0
India**	7.8	6.8	0.3
Russia	3.6	3.2	0.6

*) Indonesia, Malaysia, Philippines, Thailand, Vietnam. **) Fiscal year from 1 April to 31 March

VDMA: Order intake and revenue printing presses

20
10
0
-10
-20
Order	Germany	Foreign	Revenue	Germany	Foreign
intake		countries			countries

% Change to previous year

5

Statement Q1 2024

According to the German Mechanical and Plant Engineering Association (VDMA), plant and machinery orders declined by 13% in price-adjusted terms in the first three months of 2024 compared to the corresponding period of the previous year, with revenue in the mechanical engineering sector falling 8% short of the previous year's figure. "At the moment, order intake is still mostly in the doldrums. Economic researchers are expecting a turnaround in the second half of the year. However, as mechanical engineering is a late cyclical, it may take a while for the slump in orders to be overcome," explains VDMA chief economist Ralph Wiechers. "On a positive note, inflation rates are currently falling further and further," he adds.

Order intake in the printing press segment fell 5% short of the previous

Order backlog Order intake per quarter

1200

1000

800

600

400

200

€m

year in the first three months of 2024. Revenue, on the other hand, increased by 2%.

Earnings, finances and assets

Earnings

At €242.9m as of 31 March 2024, order intake was 19.4% below the previous year's figure of €301.2m, in line with expectations. As forecast, the Sheetfed segment in particular saw a further sequential improvement following the muted order intake in the third quarter of 2023. Order intake in

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 23

Q4 23

Q1 24

Revenue per quarter

€m

500

400

300

200

100

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 23

Q4 23

Q1 24

the Digital & Webfed segment reflected the current temporary weakness in the market for corrugated board. Following the orders received in the Banknote Solutions business unit in the fourth quarter of 2023 from the United States Bureau of Engraving and Printing, order intake in the Special segment was significantly lower.

EBIT per quarter

30

15

-0

-15

€m

Q1 22

Q2 22

Q3 22

Q4 22

Q1 23

Q2 23

Q3 23

Q4 23

Q1 24

6

Statement Q1 2024

Group revenue came to €253.2m in the first quarter of 2024, thus falling 9.9% short of the same period in the previous year (€281.0m). This was particularly due to reduced order intake in the Sheetfed segment in the third quarter of 2023 as well as a lower percentage of completion (POC) achieved in production in the Banknote Solutions business unit compared to the previous year. As a result, revenue was down on the previous year's figures in the Sheetfed and Special segments but was slightly higher in the Digital & Webfed segment compared with the same period of the previous year. In 2024, 36.6% of revenue was generated from service business (previous year: 31.4%).

The Group export ratio contracted slightly from 88.7% to 86.8%, with the share of business in Asia/Pacific falling to 17.2% (previous year: 18.8%) and

Group income statement

in Latin America and Africa to 9.8% (previous year: 16.0%). The proportion

of revenue accounted for by Germany (13.2%, previous year: 11.3%), the

rest of Europe (32.1%, previous year: 28.5%) and North America (27.7%,

previous year: 25.4%) was up on the previous year.

At €901.2m as of 31 March 2024, order backlog was 7.2% below the good figure of €970.6m recorded in the previous year, dropping by 1.1% over the end of 2023 and providing a solid basis for further growth in 2024. Gross profit fell by 13.0% to €66.9m in the period under review, resulting in a gross margin of 26.4% (previous year: 27.4%). At €16.0m, R&D expenses were exactly the same as in the previous year. Selling expenses dropped slightly to €37.3m (previous year: €37.6m).Administrative expenses increased marginally by €0.6m to €25.6m. Net other incomecame to

			First Quarter
in €m	2023	2024
Revenue	281.0	253.2
Cost of sales	-204.1	-186.3
Gross profit	76.9	66.9
Research and development costs	-16.0	-16.0
Distribution costs	-37.6	-37.3
Administrative expenses	-25.0	-25.6
Other income and expenses	-1.5	2.1
Other financial results		- -	-0.3
Earnings before interest and taxes (EBIT)	-3.2	-10.2
Interest result	-3.3	-6.6
Earnings before taxes (EBT)	-6.5	-16.8
Income tax expense	0.8	0.2
Net loss	-5.7	-16.6
attributable to owners of the Parent	-5.6	-16.7
attributable to non-controlling interests	-0.1	0.1
Earnings per share (in €, basic/dilutive)	-0.34	-1.01

7

Statement Q1 2024

€2.1m, compared with net other expenses of €-1.5m in the previous year. Among other things, this was due to currency-translation effects. Overall, earnings before interest and taxes (EBIT) fell by €7.0m over the same period in the previous year to €-10.2m (previous year: €-3.2m), yielding an EBIT margin of -4.0% (previous year: -1.1%). This was particularly due to the aforementioned decline in order intake in the third quarter of 2023, which also led to negative volume and mix effects (around €10.5m). Both margin effects (around €2.0m) and functional cost effects (around €2.0m) improved. After net interest expense of €-6.6m (previous year: €-3.3m),earnings before taxes (EBT) came to €-16.8m (previous year: €-6.5m). After income taxes of €0.2m, the Group thus posted a net loss of €-16.6m in the first quarter of 2024 (previous year: €-5.7m). This translates into proportionate earnings per share of €-1.01 (previous year: €-0.34).

Group cash flow statement

Finances

Cash flow from operating activities amounted to €5.9m (previous year: €-22.9m). This mainly reflected the slower increase in inventories compared to the same period in the previous year as well as a sharper decrease in receivables. Prepayments received rose at a slower pace than in the same period in the previous year. At €-9.1m, cash flow from investing activities was slightly up on the previous year's figure of €-10.5m.

On balance, free cash flow amounted to €-3.2m (previous year: €-33.4m).Net working capital stood at €362.1m as of 31 March 2024 (previous year: €342.5m). Cash flow from financing activities came to €22.7m (previous year: €-16.4m) and was also affected by changes in the syndicated loan. At the end of March 2024, cash and cash equivalents were valued at €116.9m (previous year: €81.8m). Adjusted for bank liabilities of €265.5m, net financial debt stood at €-148.6m (previous year: €-99.8m), compared to €-147.6m at the end of 2023.

First Quarter

in €m	2023	2024
Earnings before taxes (EBT)	-6.5	-16.8
Non-cash transactions	15.7	15.2
Gross cash flow	9.2	-1.6
Changes in inventories, receivables and other assets	-52.9	-9.8
Changes in provisions and payables	20.8	17.3
Cash flows from operating activities	-22.9	5.9
Cash flows from investing activities	-10.5	-9.1
Free cash flow	-33.4	-3.2
Cash flows from financing activities	-16.4	22.7
Change in funds	-49.8	19.5
Effect of changes in exchange rates	-0.6	1.0
Funds at beginning of period	132.2	96.4
Funds at end of period	81.8	116.9

8

Statement Q1 2024

Assets

A total of €12.5m (previous year €7.8m) was spent on property, plant and equipment and intangible assets in connection with construction and IT projects in the period under review. Capital spending includes capitalised development costs of €1.1m (previous year: €1.1m). This was accompanied by depreciation and amortisation expense of €10.3m (previous year: €10.5m). All in all, intangible assets and property, plant and equipment increased slightly from €411.1m as of 31 December 2023 to €411.9m. Non-currentassets decreased by €5.1m to €543.1m compared to the end of 2023, mainly due to the reduction in financial assets and other financial receivables. Current assets increased by €34.6m over 31 December 2023 to €913.5m (previous year: €878.9m). At the same time, inventories

rose by €26.5m, other assets by €24.6m and cash and cash equivalents by €20.5m. On the other hand, trade receivables dropped by €34.6m. At €1,456.6m, the Group's total assets exceeded by €29.5m the figure of €1,427.1m recorded at the end of 2023. The Group net loss contributed significantly to a reduction in equity to €393.7m. Reflecting this, the equity ratio contracted to 27.0% (previous year: 28.7%). Provisions for retirement benefits dropped slightly from €104.8m as of the end of 2023 to €103.8m as of 31 March 2024 due to the slight increase in the discount rate for domestic retirement benefits from 3.41% as of 31 December 2023 to 3.49% as of 31 March 2024. Non-currentliabilities rose by €39.9m, mainly due to increased financial liabilities. Current liabilities climbed by €5.9m, primarily as a result of the higher prepayments received.

9

Statement Q1 2024

Group balance sheet

in €m	31.12.2023	31.03.2024
Assets
Non-current assets
Intangible assets, property, plant and equipment	411.1	411.9
Investments and other financial receivables	25.2	19.7
Investments accounted for using the equity method	15.1	14.7
Other assets	3.6	3.2
Deferred tax assets	93.2	93.6
	548.2	543.1
Current assets
Inventories	426.8	453.3
Trade receivables	156.2	121.6
Other financial receivables	41.3	38.7
Other assets	154.3	178.9
Securities	3.9	4.1
Cash and cash equivalents	96.4	116.9
	878.9	913.5
Balance sheet total	1,427.1	1,456.6

in €m	31.12.2023	31.03.2024
Equity and liabilities
Equity
Share capital	43.0	43.0
Share premium	87.5	87.5
Reserves	278.0	261.6
Equity attributable to owners of the Parent	408.5	392.1
Equity attributable to non-controlling interests	1.5	1.6
	410.0	393.7
Liabilities
Non-current liabilities
Pension provisions and similar obligations	104.8	103.8
Other provisions	37.0	36.7
Bank loans	191.2	231.1
Other financial payables	26.0	24.1
Other liabilities	5.4	6.0
Deferred tax liabilities	71.5	74.1
	435.9	475.8
Current liabilities
Other provisions	89.7	83.7
Trade payables	79.3	83.4
Bank loans	52.8	34.4
Other financial payables	85.8	98.2
Other liabilities	273.6	287.4
	581.2	587.1
Balance sheet total	1,427.1	1,456.6

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