Koenig & Bauer AG (KBA), a major supplier of packaging and commercial printing presses, announced in September 2008 that it expected to record a financial loss for the year rather than repeat 2007's pre-tax profit of €63.2 million. The company cited weak product demand, sterling depreciation hurting UK orders, and extraordinary costs for capacity adjustment across operations in Germany, Austria, and the Czech Republic.
KBA (UK) managing director Christian Knapp told Packaging News that while the drupa order book was maintained, sales targets would not be met because customers postponed new-equipment investments. Support and service business, however, grew as printers extended life of existing machines—pattern familiar to flexible packaging plants delaying CI flexo upgrades while running higher maintenance schedules.
Knapp observed packaging "wasn't doing so badly" compared with sheet-fed commercial print because packaging projects were often further along in capital-approval cycles when the credit crisis hit. Nonetheless, KBA anticipated annual sales around €1.5 billion, down 6% from its €1.6 billion forecast, with drupa-linked earnings failing to materialize on schedule as banks tightened equipment financing.
Koenig & Bauer's half-year 2008 results already showed slack pre-drupa demand and a 17.5% drop in first-half sales to €656.1 million. Group order backlog for sheet-fed presses shrank to €278.7 million from €306.7 million, raising third-quarter booking pressure. Web and special press divisions performed relatively better, with some segments exceeding targets.
For flexible packaging converters, KBA's 2008 experience illustrated how macro-financing conditions could stall press orders even when end-use food demand remained stable. Plants that had signed drupa letters of intent faced months of delay securing loans—foreshadowing industry-wide cancellation rates estimated above 30% for drupa 2008 deals entering 2009.