The year 2009 will soon be coming to a close, and, looking back, we can certainly say that it has been an unusual year in every respect.
At the beginning of the year, with incoming orders collapsing in every division, many people felt that out world was coming apart at the seams. But now, as the year draws to a close, we can thankfully say that we have once again evaded demise, and that the last quarter saw an almost complete return to normality.
And yet we will not achieve the sales or turnover figures of the previous year; the crash in the first half of this year was too severe. It will not be until next year that we will be in a position to return to something nearing the figures of 2008. That, at least, is the basis upon which we are currently planning for 2010.
Despite this, 2009 was not a lost year for Papierfabrik August Koehler AG, as our operative results show, which are well above those of the previous year. We are all aware that August Koehler AG is an exception, both in our region and in the paper industry in general.
The solidarity with which the workforce, management and Board tackled the sales crisis during the first half of the year is unprecedented in the history of our company. The flexible scheduling of capacity and working hours, in conjunction with the alleviatory reduced-hours arrangements, demanded a lot from our employees, but in the end it allowed us to emerge from the crisis not only financially unscatched, but in fact stronger than before. For this we would like to express our utmost admiration and gratitude to our employees.
The year 2009 also allowed us to demonstrate impressively that every crisis also represents an opportunity. This was underlined by our taking over of the Katz Group, previously insolvent, on 1 October. The Managing Board is convinced that the Katz Group, which is the world´s market leader in the beer coaster industry, can be put back on track following successful restructuring. This does of course mean entering new territory, and we are aware of the risks in the Katz Group´s core market. We know from experience that streamlining is not possible without cuts, but at the same time we recognise the potential of this business, which offers a much broader valueadded spectrum than our five paper divisions, ranging as it does from uncut spruce all the way to finish beer coasters.
But its greatest potential is sure to lie in a new business strategy aimed at sustainability, in a rediscovered proximity to its customers, and in a strong brand. That is why the Katz Group will for now not become a sixth division of the Koehler Group, but will remain instead an independent unit and brand beneath the umbrella ot August Koehler AG.
Many of us are asking ourselves what we will be faced with next year, whether we are really through the crisis and whether we can pick up next year where we left off in September 2008. In fact many economics experts, and after some hesitation the German government as well, are now forecasting growth for 2010. Our managing board also believes that we have got through the worst of the economic slump and that we will once again grow moderately in 2010. But we must not close our eyes to the risks to which every new growth phase exposes us. Government aid has helped avert the worst, but we are also aware that intervention of this kind has limits. Next year it will primarily be the economy´s selfhealing powers which will need to come into play, and that can impact on jobs. Much higher unemployment, an increasing number of bankruptcies and restrictive financial markets do not leave much space for growth. As an exporting nation, Germany needs stimulus from the outside; the engines of export absolutely must start up again. Some emerging economies give us cause for careful optimism in that regard. The biggest unknown quantity is the USA, the world´s biggest economy, which is currently in the midst of its deepest recession since the 1930s.
Thankfully the effects of the American recession on our Thermal Paper sales remained limited, and we have been growing again since the third quarter. This once more confims the importance of our foremost strategic project, involving new Thermal Paper capacity in the States.
Our project team has been busy in the past few months, and we can now report that the discussions we began in the summer wirh a partner in the American paper industry are looking promising. The key question will always be cost management, and we will only give the final
go-ahead to the project if we can be certain that costs can be managed sustainably.
At the same time we have been trying very hard to improve the Koehler Group´s capital resources. This has included doubling the liable equity and bringing in new shareholders in the form of the Fritz Holzhey family, who are very well-known investors in the paper industry and who have been friends of Koehler and the Furler family for many years.
Coupled with the pleasing cash flow situation this year, these activities have helped to build up our house bank´s trust in the Koehler Group´s performance. This is important, since the tasks that lie ahead of us will certainly require an influx of outside capital.
Each one of our five divisions showed positive results in 2009, and that in a difficult environment, demonstrating once again that we have done our homework.
So as you can see we will not in fact just be picking up where we left off in September 2008 this coming year. Instead we have come out of the crisis year of 2009 stronger than before, with a strong operative result, an improved equity capital structure, and a workforce strengthened by the crisis. These are the things we will need in the coming year to succeed once again and to continue bringing the whole company forward. I invite you to accompany us on that exciting journey.
Werner Ruckenbrod
COO
