The management board of German press maker Koenig & Bauer today presented a realignment concept that would create autonomous divisions for KBA Group's sheetfed and web businesses, as well as manufacturing and special applications. The move would affect KBA’s facility locations and anywhere from 1,100 to 1,500 jobs.
The supervisory board of company approved management’s realignment concept, which is still subject to approval during an Annual General Meeting in May 2014. Within a document about the realignment, KBA makes note of ongoing structural changes in the current media sector that have led to “significant excess capacities across the whole press manufacturing industry.”
KBA states how the world market for sheetfed presses has been halved over the recent years, and the market for web presses has contracted by around 70 percent, while sustained growth is only discernible in the digital and packaging segments, and in certain special markets.
“Swift and radical restructuring is intended to facilitate our development into a decentrally organized and highly flexible press manufacturing company, which, complementing its core business, is active above all in profitable niche markets,” said Claus Bolza-Schünemann, President and CEO of KBA. “With this decision, we have laid the foundations for sustainable realignment and interesting future prospects. The essential basis, however, is initially consolidation of our core business activities.”
The key concept of today's realignment proposal, however, is defined profit responsibilities for sheetfed presses, web presses, special applications and manufacturing. The division for special applications focuses on MetalPrint (metal decorating), security presses and the activities of the recently acquired companies Kammann Maschinenbau GmbH (screen printing for the direct decoration of hollow glass containers) and Flexotecnica S.p.A. (web flexo presses for flexible packaging).
Most of the KBA’ structural change – addressing capacity and personnel – will take place in the sheetfed offset division, particularly for what the company will define as under-performing product segments and sales units. In the web press division, KBA states activities are to be transferred to a business model based on labour flexibility, which will also create personnel adjustments.
In terms of facilities location for the overall group, it was decided to relocate selected production tasks, with corresponding personnel adjustments at its five European locations Würzburg, Radebeul, Frankenthal, Mödling (Austria) and Dobruška (Czech Republic). The closing or disposal of individual locations is not excluded, as well as administrative at the group headquarters in Würzburg. A total of between 1,100 and 1,500 jobs are to be affected at group level by the measures adopted today.
“We have made some far-reaching decisions for KBA today,” said CEO Bolza-Schünemann. “They will also be accompanied by painful cuts for the workforce. It was not easy for us to make these decisions, but they are unfortunately imperative for the future sustainability of our company. We should see the first fruits of these changes in 2015, and a return to sustainable profitability in 2016 at the latest.”
HP has announced its fourth quarter results which saw the company’s revenue figures coming in stronger than expected. The company had revenues of US$29.1 billion, which is down one percent from the prior-year period when adjusted for currency effects.
For the entire fiscal 2013 period, Hp’s net revenues were down seven percent from 2012, now standing at US$112.3 billion, down five percent when adjusted for effects of currency.
The company’s Printing segment was also down one percent in the fourth quarter,year over year, despite having increased hardware sales (commercial hardware increased nine percent). It had a 17.7 percent operating margin. Supplies revenue was down four percent.
"Through improved execution, strong cost management, and with the support of our customers and partners, HP ended fiscal 2013 on a high note," said Meg Whitman, HP President and Chief Executive Officer. "Our Q4 results demonstrate that HP's turnaround remains on track heading into fiscal 2014. While we still have much more work to do, our business units and their core assets are delivering on HP's strategy to help customers thrive by providing solutions for the New Style of IT."
HP has cut 13,000 jobs in the 2013 fiscal year and revealed that "several thousand" more will follow in 2014.
A weak web press market and subdued demand in sheetfed and special presses has caused Koenig & Bauer (KBA), the world’s second-largest press manufacturer, to scale back its expectations for its financials in 2013.
In the third quarter, the volume of new orders in the KBA Group was up 7.4 percent on the corresponding figure for 2012. For the whole nine months, however, order intake at €709.6 million was 14.1 percent down on the prior-year figure boosted by drupa (€826 million). Additionally, postponed special press shipments led to a 20.3 percent drop in group sales to €729.9 million compared to the previous year (€916.2 million). New orders of web and special presses fell 18.5 percent to €251.1 million, compared to €308.2 million in 2012.
KBA also warned that its continuing restructuring efforts would have a yet unquantifiable negative impact to its year-end financials. KBA’s management says it considers the sales and earnings targets for 2013 announced in March and already subdued in the half-year report in August to be no longer attainable.
“Along with the total group sales to be generated by the end of the year, the product mix delivered as well as the extraordinary expenses for restructuring measures and impairments will have a significant impact on the annual result in the group,” said Dr. Axel Kaufmann, CFO. “Currently this amount is not yet foreseeable, but will lead to a loss in 2013. Excluding special items, we are still targeting a positive operating result and balanced group earnings before taxes (EBT).”
KBA says it aims to compensate at least in part for the loss in business volume in other fields and by expanding its service activities and its product portfolio for growing market segments. Kammann Maschinenbau a profitable niche vendor and global market leader in printing systems for directly decorating glass containers joined the KBA Group in the third quarter. The majority takeover of the Italian press manufacturer Flexotecnica that serves the expanding flexible packaging market will also be completed shortly.
Electronics For Imaging of California reported its third quarter results, ended September 30, 2013, with revenue of US$178.8 million, which is an increase of 16 percent when compared to revenue of US$154.1 million in the third quarter of 2012.
For the nine months ended September 30, 2013, EFI reported revenue of US$530.5 million, up 11 percent when compared to US$478.0 million for the same period in 2012.
"The EFI team delivered a very strong third quarter with record revenue and a terrific increase in profitability," stated Guy Gecht, CEO of EFI.
The company’s Fiery operating segment lead the charge in the third quarter of 2013, by generating US$63.2 million in revenue compared to this segment’s US$50.7 million in revenues in Q3 2012. Productivity Software, which holds EFI’s portfolio of Management Information System technology, increased to US$28.5 million in Q3 2013 when compared to US$24.2 in the year ago quarter. EFI’s Industrial Inkjet segment also increased in Q3 2013 compared to the year ago quarter, coming in at US$87.1 million in 2013 versus US$79 million in Q3 2012.
When looking at revenue by geographical area, the Americas and EMEA had the most positive third-quarter effect for the company. The Americas, which remains as EFI’s dominant region, increased to US$102.4 million in Q3 2013 from US$86.4 million in Q3 2012. EMEA reached US$52.2 million in the third quarter of 2013 from US$41.1 million in the third quarter of 2012.
PrintAction spoke with Ron Morgan, who led Peel Graphics’ wide-format operation in Markham, which was described as “a bit of a disaster” by one of the parent company’s principals after their August bankruptcy filing.
Headquartered in Brampton, Peel Graphics made its bankruptcy filing on August 9 listing total liabilities of approximately $6.6 million, of which around $4.8 million was owed to unsecured creditors. Peel’s bankruptcy filing also listed more than 170 creditors of which the majority are based in the Greater Toronto Area’s congested printing community.
After the bankruptcy filing, Advertek of Vaughan, Ontario, announced on August 20 that it had purchased some of Peel’s assets and also hired a majority of the company’s employees, including Andrew Cook, former President and co-owner of Peel Graphics along with its former General Manager, Susan Nyilas. PrintAction then spoke with the owners of Advertek and Andrew Cook about the asset purchase. When asked about Peel’s bankruptcy filing, Cook said, “We opened the Markham facility two years ago and I would call that a bit of a disaster. It took quite some time to get work going in the wide-format arena and it really caused a lot of problems for Peel Graphics. At the Brampton location, we really didn’t have a lot of issues – it was business as usual. The Markham facility was a big challenge for us.”
Morgan helped establish the Peel Markham wide-format operation two years ago, shortly after his company, Acuity Solutions Group of Richmond Hill, Ontario, closed its doors in June 2011. Several of Acuity’s former staff, just over 25 people, joined Morgan at Peel Markham by the third week of July 2011 and the facility opened up in August.
“I don’t want to be tainted with a brush,” says Morgan, in response to Cook’s assertion of Peel Markham being a disaster while the company’s long-standing Brampton plant faced few issues. “I already went through one receivership. I take ownership of it. I don’t want to be tainted with the [Peel] receivership when we did everything in our power to try to make it not happen.”
Morgan became a partner in Acuity shortly after the turn of the new millennium when the company was generating around $2 million in sales. Five years later he bought out his partner for $3 million and continued to grow Acuity toward a peak of generating more than $18 million in annual revenues. When North America’s recession began to hit in 2007, Morgan explains Acuity’s annual sales plunged to around $12 million.
“Over the next 12-month period I had support from the bank that we reported to regularly… We were finally starting to show a positive EBITDA and we were doing a little bit better,” says Morgan, describing the final days of Acuity. “I lost my bank manager, who was a supporter. He was transferred back to India.”
Acuity at the time was still operating out of covenant – not meeting required financial ratios – with its primary lender, the State Bank of India. Morgan says the bank suddenly decided to shut Acuity’s doors one Friday afternoon with Grant Thornton appointed as trustee. When Acuity was shuttered it had around $ 1.9 million worth of unsecured creditors and Morgan says he lost $4.5 million of his own investment in the company.
“I might not have been perfect in what happened with Acuity, but we tried our best,” says Morgan, whose prior financial agreements disallowed him from presenting objections to the State Bank of India to postpone the receivership. “We were straight with everyone and we had no control. We did not choose to put Acuity into the hands of the trustee. We did the opposite.”
Morgan says he soon after began discussions to start up a new wide-format operation similar to Acuity with Cook and Nyilas of Peel Graphics, which primarily generated revenue out of their Brampton location by printing for the trade in Toronto. Morgan claims the Peel Markham facility, starting from zero, eventually began selling around $6.2 million worth of business of which approximately 40 percent was generated from wide-format and 60 percent from offset lithography funneled to Peel’s Brampton location. “We were going to bring Peel into point-of-sale [work], which would mean that Peel would get contracts with the likes of Coca-Cola and Kraft and Mondelez, and we did that.”
In his nearly two years of running Peel’s Markham facility, Morgan says never took on an ownership position with the company even though this direction was discussed. “At any time, Peel could have shut down the Markham location,” says Morgan. “My sole job at Markham was to manage production, which we did efficiently, and to manage the Markham people. The only people who could influence the outcome of the company were the two owners.”
Morgan says, after about six months of running the Markham location, he was asked to attend a meeting in Brampton and informed of Peel’s existing debt challenges. “One little plant in Markham, no matter what overhead you throw at it, could not have caused those issues,” says Morgan, explaining he was privy to much of Peel’s financial information despite not holding interest in the company. “I had no ability in any way to influence the income or the non-profit of Peel other than sales.”
Morgan says he discussed various proposals with Cook and Nyilas to fix Peel’s debut issues, which included owing the Canadian Revenue Agency approximately $473,000. However, he asked for any such investment to solely focus on the Markham operation, which he did not want to shutter. “I got a phone call in June asking, one more time, will we shut down Markham and move to a different plant, and I said no.” Morgan claims he then received a phone call over the Canada Day holiday weekend and was told not to come into work on Tuesday. “As the employees arrived one by one, they fired each employee on the spot and they locked me out,” says Morgan, who claims to also be owed money by Peel’s former owners. Morgan says he has since resigned from Mi5 Print & Digital Communications Inc., where he became VP in July 2013, because of the negativity surrounding the bankruptcies of both Acuity and Peel.
PaperlinX Limited released financials for its full year, ended June 2013, which included positive numbers from its Canadian operation despite a statutory loss (after tax) of $90.2 million for the entire company. PaperlinX had a loss of $266 million in its 2012 fiscal year.
Spicers Canada, a division of PaperlinX headquartered in Australia, recorded earnings of $13.2 million for the 2013 fiscal year, which improved from $8.3 million in 2012. The Canadian division’s $13.2 million in earnings was based on the generating sales revenue of $401.5 million in 2013.
Canada is recorded as the only individual country to have positive earnings, based on the fact that PaperlinX groups together Australia, New Zealand and Asia, which collectively had a slightly smaller positive number than the Canadian operation at $13.0 million in earnings for 2013.
PaperlinX’ European operation recorded a loss of $34.3 million in earnings for the full year of 2013, which increased from a loss of $23.5 million in the year prior. In Europe, sales revenue dipped from $2.3 billion in 2012 to $1.9 billion in 2013.
Revenue for the entire company was down 12 percent at $2.8 billion for 2013 when compared to total revenue of $3.2 billion in 2012.
“Our turnaround strategy is progressing, with significant restructuring initiatives undertaken, particularly in Europe,” stated Dave Allen, Chief Executive Officer. “Our efforts this year are forecast to result in permanent cost savings of $35 to $40 million from FY14. To deliver this, very difficult decisions have been taken, but we are confident that these pave the way to profitability for the Group.”
PaperlinX recorded a lower net debt of $122.7 million in 2013 versus the prior year of $147.8 million, which the company states to reflect proceeds from the sale of businesses in the first half of this year. These sales, according to PaperlinX, were partially offset by cash trading losses, additional restructuring and unfavourable movements on foreign currency.
Peel Graphics, with locations in Brampton and Markham, Ontario, filed for bankruptcy on August 9 with total liabilities of approximately $6.6 million, of which around $4.8 million is owed to unsecured creditors.
Headquartered in Brampton, Peel Graphics traced its roots back to 1933 and its production of a Brampton community newspaper. The company’s Website lists current services such as offset printing, digital printing, Web-to-print, bindery and cross media, as well as primary press equipment including a Heidelberg XL 105, Xerox iGen4 and 80-inch-wide VUTEk GS2000.
The first meeting of creditors of the bankruptcy is scheduled for August 27 at the office of receiver Schwartz Levitsky Feldman in Toronto.
Among the more than 170 creditors listed in the bankruptcy proceedings, Andrew Cook, noted as President of Peel Graphics at the time of its bankruptcy, is among the unsecured creditors for an amount of approximately $252,000 through Emas Management Consultants of Vaughan, Ontario. Calls placed to Cook today were not returned.
Nine paper suppliers are also among the unsecured creditors, collectively owed more than $371,000, with Asia Pulp and Paper being the highest paper-related creditor owed approximately $205,000. This does not account for several specialty substrate suppliers, which includes at least another four companies owed around $132,000.
Sixteen fellow printing operations, primarily located in the Greater Toronto Area, are owed at least $152,000 as unsecured creditors, not accounting for companies that provide pre-printed forms or several other printing operations owed less than $1,000. Bindery and finishing companies, who are owed at least $1,000, account for 12 of the unsecured creditors and a collective amount of approximately $127,500.
On the equipment supply side, focusing primarily on offset, toner and inkjet presses, unsecured creditors among this group are owed at least $279,000, in addition to approximately another unsecured $759,500 owed as a balance of claim to two secured creditors, including one lease-finance company. These two equipment supply creditors are also secured for another $400,000 owed. Collectively, primary equipment suppliers, including the finance-lease company, are owed approximately $1.04 million that is unsecured and $400,000 that is secured (around $1.44 million total). Xerox is the highest equipment-supply creditor with $604,569 unsecured and $150,000 secured ($754,569 total).
The Business Development Bank of Canada, based out of Mississauga, is listed as a creditor for an unsecured amount of approximately $1.71 million and a secured amount of around $831,000. Another $44,381 is owed to preferred creditors primarily for wages and rent. Peel Graphics, according to the receiver's list, has assets of around $1.7 million, primarily in machinery and equipment.
Catalyst Paper of Richmond, BC, reported a net loss of $28 million for the second quarter of 2013, a period which the company describes as being heavily impacted by maintenance downtime. Catalyst reported a 2013 first quarter net loss of $9.8 million.
Before specific items, the company’s net loss in the second quarter of 2013 was $18.1 million. Specific items in Catalyst’s Q2 included a $2.1 million gain on the sale of the Elk Falls industrial site, a non-cash loss on the mandatory redemption of Exit Notes of $2.3 million and a $9.6 million non-cash loss on the effect of foreign exchange in relation to the U.S. dollar.
Revenues of $263.4 million for the second quarter of 2013 were up from the prior quarter, reflecting higher sales volumes for specialty uncoated, newsprint and directory, higher transaction prices for newsprint and pulp. Pulp sales volume was up over the same quarter of 2012 as was the transaction price.
Cash flow from operations increased by $11.2 million and liquidity improved by $63.1 million from the same period last year, according to Catalyst, due in part to borrowing base improvements, asset sale proceeds and a return to more normalized vendor payment terms since the company's exit from creditor protection.
When comparing 2013 second quarter results to the same period of the prior year, Catalyst notes that newsprint and directory showed the steepest decline at 8.9 percent and 15.2 percent, respectively, while the decline in specialty coated at 4.9 percent and specialty uncoated at 1.3 percent was less pronounced.
Electronics For Imaging of Foster City, California, released its financial results for the second quarter (ended June 30, 2013) with a revenue increase of 10 percent when compared to its second quarter of the previous year.
Revenue for EFI’s most recent second quarter rose to $180.3 million from $163.9 million (all figures in U.S. currency) in Q2 2012, which the company refers to as “all-time record revenue” for corresponding periods. “We could not have been more delighted with the record results the EFI team delivered in the second quarter as our product innovation continues to drive demand across our three segments,” stated Guy Gecht, CEO of EFI. “We look to maintain this momentum into the third quarter as customers increasingly turn to EFI to make their businesses more competitive.”
All three of EFI’s operating sectors experienced revenue growth in the second quarter of 2013, including its Industrial Inkjet segment which grew 10 percent year over year by generating $88.0 million in Q2 3013 from $79.8 million in Q2 2012. In the Productivity Software segment, revenue grew 11 percent to $28.5 in Q2 2013 from $25.7 million in Q2 2012; and EFI’s Fiery segment grew nine percent to $63.8 million from $58.4 million over corresponding periods.
The Americas continues to be EFI's primary business region when comparing from where its $180.3 million in second quarter revenue was generated: Americas, $100.5 million in Q2 2013 revenue; EMEA $50.0 million; and APAC $29.8 million (with Japanese operations accounting for $5.8 million inside the APAC designation). EFI's business in the Americas grew by 22 percent in the second quarter of 2013 when compared to last year's quarter in the region.
Second quarter 2013 non-GAAP net income was $18.3 million or $0.38 per diluted share, compared to non-GAAP net income of $14.2 million or $0.30 per diluted share for the same period in 2012. GAAP net income was $9.4 million or $0.20 per diluted share, compared to $7.0 million or $0.15 per diluted share for the same period in 2012.
For the six months ended June 30, 2013 (first and second quarters), EFI reported revenue of $351.7 million, which is up a total of nine percent year-over-year when compared to $324.0 million for the same period in 2012.
In November of 2012, Sun Media cut 500 employees and closed two printing operations in Kingston and Ottawa. In November 2011, 400 jobs were axed as some production was outsourced to India. The company still holds 36 paid-circulation daily newspapers and 3 free dailies producing a weekly circulation of 15.1 million copies. It also owns close to 200 community newspapers nationwide.
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