Looking at KBA's third quarter report, one has to give the management team credit for not only doing a good job making the most out of a continuing difficult market situation, but also trying to adjust to the new reality by making strategic moves in order to add to the core business and (maybe late but probably not too late) addressing structural issues at the expense of short term results.
Orders increased over the last two quarters but are below the DRUPA year 2012. The company still lives off its backlog of what I believe to be an exceptionally strong order intake of good margin specialty presses (booked in 2011, and visible in the three large red columns below), but eventually that rat will have gone through the python, as the saying goes.
Assuming that the reported shipment delays are only short term issues and given the current adequate backlog in sheetfed and web as well as increased inventories, the company should be able to achieve its new sales forecast of €1.1 billion for the year (vs. a plan of €1.3 billion), still requiring it to ship 1/3 of annual sales in the last quarter. However, and there is the problem, barring a surprise order spike the backlog will likely end up between €520 and €550 million, uncomfortably low for a billion Euro company with an unusually wide product portfolio, requiring special engineering (and thus longer lead times) for many of its orders. 2014 is going to be another challenge.
In my August post I already mentioned the need for further downsizing because of the shrinking backlog. While it might have been tempting to delay the inevitable further and squeeze out another break-even year with a strong fourth quarter, KBA management is not pushing its problems into next year hoping for a gift from the market. While it is the right thing to do, the stock market did not like it much.