KBA

Press ManufacturerKoenig & Bauer AG (KBA)

Albrecht Bolza-Schünemann, President and CEO

Deutsche Bank German Corporate Conference, 31 May

KBA

Printed products are used frequently every day

! Newspapers, supplements

! Magazines, catalogues

! Packaging

! Books

! Posters

! Metal decorating

! Banknotes

KBA

! 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

KBA: the world’s first press manufacturer

KBA

Printing presses today are high-tech products

KBA

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)

*Group figures in 2004

KBA

1,232

1,3541,304

1.087

950

822748

694688667654733

580

483455

185200

400

600

800

1,000

1,200

2002

in €m

0

IPO

200320012000199919981997199619951994199319921991199019891985 2004

1,423

*projected

2005*

Acquisitionof Grafitec,Dobruška,Czech Rep.

Sales growth

∼1,500

Acquisition of Albert-

Frankenthalcreates the KBA group

Acquisition of majority stake in KBA Planeta

Merger with Planeta and

re-adoption of name Koenig &

Bauer

Acquisition of security press

alliance partner De la Rue Giori

Acquisition of Bauer+Kunzi, manufacturer

of metal-decorating

presses

Acquisitionof Metronic,

manufacturerof industrial ID and UV offset

presses

1,400

1,600

KBA

KBA – WORLDWIDEExport level 85.9% in 2004

Europe

45.7%

Germany

14.1%7%

Africa/Latin America

17.8%

Asia/Pacific

USA/Canada

15.4%

2004

% of turnover

! Sales and service subsidiaries have been established in Europe and North America, our prime markets

! We have also set up sales and service subsidiaries in potential growth markets such as South-East Asia, Australia, Latin America and the CIS

! A global network of agencies guarantees on-the-spot customer care

Independent dealersSubsi-diaries

Productionplants

KBA

KBA Group Performance 2004

KBA

596.1 614.3 597.3

659.7 617.5

259.6

702.7 593.2706.8

756.4 716.2

299.8

893.0

1,423.01,459.1

856.9

1,231.81,255.8

0

200

400

600

800

1,000

1,200

1,400

1,600

Sheetfed offset pressesWeb and special presses

Order intake Sales Order backlog1.1. - 31.12. 1.1. - 31.12. End of year

€m

2003 2003 20032004 2004 2004

(+16.2%) (+15.5%)

(+4.2%)

Group performance 2004 (IFRS)

KBA

in €m 2003 2004Revenue 1,231.8 1,423.0Costs of sales -947.4 -1,089.2 Gross profit 284.4 333.8Research and development costs -57.6 -54.8 Distribution costs -114.8 -140.9 Administrative expenses -94.9 -87.7 Other operating income and expenses -19.0 -30.1 Pre-restr. operating profit/loss -1.9 20.3Restructuring expenses -45.1 - Post-restr. operating profit/loss -47.0 20.3Financial result -2.6 -4.4 Profit/loss from ordinary activities -49.6 15.9Income taxes 19.6 -4.0 Net profit/loss for the period -30.0 11.9

Group performance 2004 (IFRS)Income statement Jan-Dec

KBA

! Equity ratio 33.3%

! Cash flows from operating activities €39m

! Investment €57m (prior year: €45.3m)

! Depreciation €46.3m (prior year: €57.2m)

! Payroll on 31.12. 7,398* (prior year: 7,054)* including 290 Metronic, 50 Bauer+Kunzi,509 apprentices

! Earnings per share €0.74 (prior year: -€1.86)

! Projected dividend per share €0.25

Group performance 2004 (IFRS) Additional group figures

KBA

135.8 113.5

593.2173.8 144.4

299.8

143.2

588.5

138.5

375.6

168.1243.9

309.6 257.9

893.0

382.4 311.3

964.1

0

200

400

600

800

1,000

1,200

1,400 Sheetfed offset presses Web and special presses

Order intake Sales Order backlog1.1. - 31.03. 1.1. - 31.03. 31.12. / 31.03.2005

€m

2004 2004 20042005 2005 2005

(+23.5%)

(+20.7%)

(+8.0%)

Group performance in 1st quarter 2005 (IFRS)

KBA

in €m 2004 2005

Revenue 257.9 311.3Cost of sales -195.7 -245.6

Gross profit 62.2 65.7Distribution costs -31.6 -34.2 Administrative expenses -22.3 -21.4 Other operating expenses -11.9 -14.3

Loss from operations -3.6 -4.2 Financial result -0.7 -1.6

Loss before taxes (EBT) -4.3 -5.8 Taxes 0.6 1.0Profit attributable to minority interests -0.2

Net loss less minority interests -3.9 -4.8

Group performance in 1st quarter 2005 (IFRS)Income statement Jan-March

KBA

Market Situation

KBA

Global communications market 2003

€1,820bn in total*

Internet€50bn TV

€185bn

Print€500bn

Radio€35bn

Telecommunications€1,050bn

*projected

Packaging 27%

Commercials 36%

Magazines 15%

Newspapers 15%

Other 7%

KBA

Dire

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Boo

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Dire

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Supp

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New

spap

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Cat

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Adv

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Mag

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Pack

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New

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Form

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Gre

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Man

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Cal

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-5

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5

10

15

20

25

30

Global print market

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

Projected future market growth in %

KBA

World printing press market 2005

! 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 theMiddle East and in North Africa

Total market volume* approx. €9bn

Newspaper €1.1bn

Commercial web€1.1bn

Sheetfed offset€5bn

Flexo, gravure, other €1.8bn

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

KBA

KBA’s Strategies

KBA

KBA’s strategy in sheetfed offsetBiggest 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

MAN Roland14%

Heidelberg42%

Other9%

Mitsu-bishi

6%

KBA15%

Komori14%

KBA

KBA sheetfed offset sales over the past ten years

€m

Figures since 2001 as per IFRS

716

618

185211

248283

334

619

552

492

399

0

100

200

300

400

500

600

700

800

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

KBA

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

KBA

KBA’s strategy in sheetfed offsetExpand 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

KBA’s strategy in sheetfed offsetDefend 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

! 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 withlandmark innovations (e.g. KBA Cortina)

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

MAN Roland42%*

KBA29%

Other8%

Wifag9%Goss

12%

* special effect in 2004 because of News International order

KBA

KBA’s strategy in commercial web offsetMedium-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

MAN Roland30%

Goss International32%

KBA11%

Other4%Komori

12%Mitsubishi11%

KBA

KBA’s successful engagement in niche markets 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 pressworldwide, with anoutput of 8.2 million full-colour A4 pages per hour

KBA

KBA’s successful engagement in niche markets Metal-decorating presses

! Bauer+Kunzi, our subsidiary

since 2003, is the technology

and market leader in large-

format, multicolour metal-

decorating offset presses

(based on Rapidas)

! Annual sales potential

of €25m - €30m

! A small niche market with good

prospects

KBA

KBA’s successful engagement in niche markets UV offset and industrial ID systems

! Metronic, our subsidiary since 2004,has a well-established customer basein 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

KBA

KBA’s successful engagement in niche markets 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

KBA

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

€m

Exports of printing presses*

2373

4024

2999

4068

3457

4164

4661

37123814

3518

2598

2246

25412428

27172776

1639

940

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1980 1985 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

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

KBA targets for 2005

KBA

KBA targets for 2005

! 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

Koenig & Bauer AGFriedrich-Koenig-Str. 4

D-97080 WürzburgGermany

www.kba-print.com

Thank you