The backlog for web and special presses is down 33% from its recent 2011 peak to Euro 450 million, or closer to only 9 months of average trailing 12 months sales. In addition, the lower than average sales of the last two quarters have prevented the backlog from melting down even faster which raises some obvious questions in connection with an overall increase in inventory.
On the sheetfed side, orders have been in decline for the last four quarters. After a quick look at Heidelberg's latest press release it looks as if this trend is also in place for the market leader.
KBA's sheetfed quarterly sales were unusually low at Euro 98 million after a gang buster Euro 248 million in Q4-2012. Despite the meager new orders, sheetfed backlog ended up some Euro 35 million. While this Q4/Q1 swing is nothing new for the company, it appears to have become more extreme, usually not a good sign, especially when new orders continue to decline. First quarter numbers for the other sheetfed suppliers and feedback from this week's Print China Exhibition will provide further insight soon.
Without even going into questions like margin trends, backlog quality or accounting effects on specific balance sheet items, it is clear that the situation - probably for all equipment suppliers - remains difficult. KBA, as others, have been working on the right strategies to stem the decline of its traditional newspaper and commercial printing segments. Right now the company probably has some strategic opportunities even in the traditional segments as it appears to be more market focused than some of its competitors. However, with a shrinking profitable backlog for web and specialty presses (likely more specialty than web) and a potential slowdown of the important Chinese sheetfed market, the successful execution of its inkjet and web packaging strategy will be even more important.
The stock market - as always - has its own view, as the chart below illustrates.