Ad hoc: Koenig & Bauer AG: Koenig & Bauer AG: CEO Hansen: KBA on course despite soft demand

Koenig & Bauer AG / Miscellaneous business figures / Ad hoc: Koenig &
Bauer AG: CEO Hansen: KBA on course despite soft demand

Ad hoc announcement according to §15 WpHG processed and transmitted
by Hugin. The issuer is solely responsible for the content of this
announcement.

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Since April German press manufacturer Koenig & Bauer (KBA) has seen a
major upturn in new orders for sheetfed presses, with business
drummed up at trade fairs in the Middle and Far East largely
balancing a shortfall in the first quarter. This was the message
delivered by Helge Hansen, KBA president and CEO since 27 March, at
the company's 84th AGM at the Vogel Convention Center in Würzburg.
However, as Hansen warned the serried ranks of shareholders present,
demand for big newspaper and commercial web presses remains
unsatisfactory. "While we have increased our share of the global
newspaper market to almost 50 per cent, the total volume of new
orders booked in the first five months was well below our target for
the year. The global recession and financial meltdown continue to
impact on demand in the sector, and are now affecting sales of
special presses for niche applications. At present the only bright
spot in this gloom is the security printing sector."

He continued: "Since the financial crisis broke, customer financing
has become increasingly difficult and changes in banks' lending
practices have in many cases put paid to planned investments. Even
so, the past few months have shown that KBA's product range, which is
much broader than that of the market leader and embraces customised
multi-unit web presses, batch-produced and special sheetfed presses,
exerts a stabilising influence on sales."

Referring to recent media reports of state aid for press
manufacturers, Hansen warned against generalisations based on
isolated cases, and argued for a more differentiated assessment of
individual enterprises. He followed this up by emphasising the KBA
group's solid financial and liquidity base compared to certain
rivals: "At present we have no net bank debts. On the contrary, in
recent months we have improved our net financial position to a good
EUR36 million and our operative cash flow is positive. At the end of
March our equity ratio stood at 33.9%, well above the norm for the
engineering sector. In addition to EUR100 million in funds we have a
credit line of EUR160 million, of which more than 60% is guarantee
credit required to safeguard the customer down payments that are
routine in the heavy plant industry. We have applied for a government
guarantee effective from 1 April 2010. As you are aware, at present
such guarantees reflect changes in banks' risk policies rather than
in KBA's liquidity."

KBA is a solid, solvent enterprise and has no need of the "state
prop" somewhat prematurely assigned it by a certain business journal.
However, as Hansen explained, "we are concerned about possible
competitive imbalances that may be caused by government
intervention."

KBA will continue to expand its service activities, and is also
aiming to expand its consumables business. As it has done for the
past 192 years, the group will remain an innovative and trusted
provider for print entrepreneurs the world over. But like many other
industry insiders, once this crisis has passed the KBA management
board does not see the global market volume for press technology
returning to the high levels of 2005 or 2006 for the foreseeable
future. Growth is being limited by changes in media consumption
habits, ongoing consolidation in the print sector, a rapid increase
in press productivity and the emergence of low-budget rivals in
threshold economies like China and India.

Last year, amid financial and economic turbulence, KBA posted group
sales of EUR1.53bn, a good EUR200m below the record EUR1.74bn for
2006, and this year the figure will shrink by over EUR300m to just
under EUR1.2bn. Helge Hansen comments: "We and the other press
manufacturers cannot stop the market from shrinking, so to achieve a
decent return again as soon as possible we must adjust our capacity
accordingly."

Hansen goes on: "To achieve the growth KBA undoubtedly requires in
the medium term, we must look to high-potential sectors where we can
capitalise on our formidable skills in engineering, high-quality
machine manufacture and global distribution. Two of the sectors we
are focussing on are packaging and green energy technology, and here
we have already developed specific concepts. Alongside a more
customary merger or acquisition we are considering taking a stake in
a promising new start-up or entering an alliance with an established
player as a means of gaining access to these markets. Our solid
balance sheet and finances certainly give us plenty of scope."

According to the preliminary figures quoted by Hansen, in the first
five months of the year the KBA group posted a 20.7% decline in new
orders (1st quarter: 40.7% decline). However, the revival in sheetfed
business swelled the order backlog at the end of May to EUR557.1m
(1st quarter: EUR500.8m). Group sales, at EUR347.5m, were 34.7% down
on the corresponding figure for the previous year and 10.7% below
target. Meeting the group target for 2009 of around EUR1.2bn will
depend largely on market trends in coming months. Said Hansen:
"Following last year's substantial loss we have a real chance of
achieving our ambitious goal of posting a balanced result, even if
sales are just shy of EUR1.2 billion."

In view of the net loss posted by the parent, Koenig & Bauer, no
dividend will be paid for 2008.

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Koenig & Bauer AG
Friedrich-Koenig-Straße 4 Würzburg Germany

WKN:
719350; ISIN: DE0007193500; Index: SDAX;
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