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Koenig & Bauer AG

Investor Presentation • May 31, 2005

248_ip_2005-05-31_6a2b10e7-092c-4875-9369-d272c8e035dd.pdf

Investor Presentation

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Deutsche Bank German Corporate Conference, 31 May

Press Manufacturer Koenig & Bauer AG (KBA)

KBA

Albrecht Bolza-Schünemann, President and CEO

Printed products are used frequently every day

  • !Newspapers, supplements
  • ! Magazines, catalogues
  • ! Packaging

  • ! Books

  • ! Posters

  • !Metal decorating
  • ! Banknotes

! At the beginning of the 19th century our founder, Friedrich Koenig, had the ingenious idea of guiding a paper web over a rotating cylinder ! In 1814 The Times became the first newspaper in history to be printed by machine – Koenig's double-cylinder press

Printing presses today are high-tech products

KBA: one of the world's top press manufacturers

  • ! An innovative, customer-driven partner to the print media industry with...
  • ! an outstanding reputation
  • ! the broadest product range in the business
  • ! the pole position in many fields of print technology
  • ! an export level of 80 – 90%
  • ! annual sales of €1.4* billion
  • ! 7,800 employees worldwide (including KBA-Grafitec)

Sales growth

KBA – WORLDWIDE

Export level 85.9% in 2004

KBA

KBA Group Performance 2004

Group performance 2004 (IFRS)

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KBA

Group performance 2004 (IFRS)

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Од Квя
-------- --

Group performance 2004 (IFRS)

Additional group figures

  • !Equity ratio
  • ! Cash flows from operating activities
  • ! Investment
  • ! Depreciation

  • ! Payroll on 31.12.

  • ! Earnings per share

  • ! Projected dividend per share €0.25
  • 33.3%

  • €39m

  • €57m (prior year: €45.3m)

  • €46.3m (prior year: €57.2m)
  • 7,398* (prior year: 7,054)
  • * including 290 Metronic, 50 Bauer+Kunzi, 509 apprentices
  • €0.74 (prior year: -€1.86)

Group performance in 1st quarter 2005 (IFRS)

Group performance in 1st quarter 2005 (IFRS)

Income statement Jan-March

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Market Situation

KBA

Global communications market 2003

KBA

€1,820bn in total*

Key print products are expected to grow by 2-5% p.a.

  • ! E-media complement print media, expanding demand
  • ! Paper still offers many advantages as a vehicle of information
  • ! Global paper consumption rose in the last few years, despite the internet
  • ! Huge pent-up demand for print in emerging markets

  • ! Modest recovery, perceptible since summer 2003, is still fragile and subject to geographical and segmental fluctuations
  • ! German market remains a cause for concern, although domestic demand for KBA sheetfed and newspaper presses has improved
  • ! Demand in pre-accession EU has picked up at a moderate pace
  • ! Good growth prospects in the east European EU accession states, parts of Asia (especially China), in the oil-producing countries of the Middle East and in North Africa

KBA *excluding toner-based technologies, digital print and office print

KBA's Strategies

KBA

Biggest single press market with a volume of €5bn

  • ! Double-digit growth rates almost continuously for more than ten years, despite an industry downturn caused by the recent economic recession
  • ! Current global market share of around 15% puts KBA in second place behind Heidelberg
  • ! Targets:
    • - Maintain dynamic growth in sheetfed offset
    • - Consolidate second place behind Heidelberg

KBA sheetfed offset sales over the past ten years

KBA Figures since 2001 as per IFRS

KBA's strategy in sheetfed offset

Expansion drive in small-format market (volume €2bn)

  • !Acquisition of Grafitec, a Czech manufacturer of small-format sheetfed offset presses, in March 2005
  • ! 400 employees, €20m sales in 2004
  • ! Complements existing KBA presses, which address high end of market
  • ! Targets more price-conscious users in small-scale printshops and threshold markets

KBA's strategy in sheetfed offset

Expand share of medium-format market

  • ! KBA market share in B1 (700 x 1,000mm), the largest sheetfed offset sector, worth €2.5bn: ∼ 13%
  • ! Dynamic growth in sales of medium-format KBA presses:
    • - rapid transition to serial production of a new Rapida 105 version (18,000 sheets per hour) launched in March 2004
    • - raft of features unique to our presses
    • - market recognition of our initiatives in advancing process technology (example: cost-effective hybrid coating)

KBA's strategy in sheetfed offset

Defend pole position in large-format market

  • ! KBA market share 2004 in large formats up to 1,510 x 2,050mm: ∼ 60% (market volume: €0.5bn)
  • ! KBA is the acknowledged international market leader in large format, the KBA Rapida 205 is the world's largest sheetfed offset press
  • ! Ongoing demand for modern KBA technology

KBA's strategy in coldset web offset (newspaper) Extend technology lead and grow market share

  • ! KBA market share 2004: ∼ 29% (market volume: €1.1bn)
  • ! KBA is one of the top two manufacturers of newspaper presses, market leadership alternates with MAN Roland
  • !KBA is a driver of technological and process innovation (6/2 configuration) aimed at making high-quality newspaper production more economical
  • ! Stimulate investment with landmark innovations (e.g. KBA Cortina)

Medium-term expansion of market share to 15%

  • ! KBA market share 2004: ∼ 11% (market volume: €1.1bn)
  • ! Broad range of commercial presses for 16 to 72 pages offers a choice of performance levels and formats
  • ! A number of unique features (eg variable format folders) and technology transfers from gravure support future growth

Publication rotogravure presses

  • ! Market and technology leader in high-performance presses for web widths of more than 2.65m (market share: ∼ 70%)
  • ! Niche market with limited number of major players currently investing heavily (sales average €35m-€50m; in 2005 approx. €90m)
  • ! New TR 12B for a web width of 4.32m is the broadest rotogravure press worldwide, with an output of 8.2 million full-colour A4 pages per hour

Metal-decorating presses

  • ! Bauer+Kunzi, our subsidiary since 2003, is the technology and market leader in largeformat, multicolour metaldecorating offset presses (based on Rapidas)
  • ! Annual sales potential of €25m - €30m
  • ! A small niche market with good prospects

UV offset and industrial ID systems

  • ! Metronic, our subsidiary since 2004, has a well-established customer base in the market for industrial ID technology (inkjet, laser)
  • ! Strong position in market for UV offset on smart cards and digital data storage devices (CD, DVD etc.)
  • ! Current sales potential €35m - €40m, with good medium-term growth prospects

Banknote and security presses

  • ! KBA is the global leader in this sector and has an unparalleled systems competence embracing a broad choice of peripherals
  • ! More than 90% of all banknotes worldwide are printed on presses marketed by our specialist subsidiary, KBA-GIORI
  • ! A highly profitable niche market with annual sales potential of around €120m - €150m

KBA

Outlook for the future

Exports of printing presses*

Source: VDMA, KBA; figures from 1996 onwards estimated due to change in statistical database *incl. finishing

KBA

  • ! Projected increase in Group sales to around €1.5bn (2004: €1,423m)
  • ! High level of plant utilisation at our web press division
  • ! Huge backlog of orders for sheetfed offset presses
  • ! Popularity of our new products has laid the foundations for sustained growth
  • ! Future growth will also be supported by our new Czech subsidiary KBA-Grafitec, with its entry-level presses

  • !Further improvement in pre-tax Group earnings (2004: €15.9m)
  • ! Gains are delivered by
    • - cost-cutting initiatives (now completed) at our web press production facilities
    • - more flexible labour agreements at all our German operations
  • ! Negative impacts on profit
    • - continued pricing pressures
    • - uncertainty in currency markets
    • - higher prices for steel

KBA

Thank you

Koenig & Bauer AG Friedrich-Koenig-Str. 4 D-97080 Würzburg Germany www.kba-print.com

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