Faced with a 90 percent drop in pre-tax earnings in 2002, MAN Roland last month said it would launch a package of cost-saving measures to help the press supplier grapple with weaker demand.

Executives said they wanted to carve approximately $140 million (U.S.) of costs over the next several years. While MAN Roland’s sheetfed unit will sustain the biggest cost reductions — representing some $87 million — the company’s web press operations will be asked to shave some $38 million in costs. An additional $16.3 million in costs will be trimmed from the trade and services sector and the international sales network, MAN Roland said.

MAN Roland didn’t specify how it intends to pare costs, but did say personnel reductions and facility consolidation would be part of the plan.

MAN Roland’s moves didn’t surprise one market observer.

“I spoke with (company chairman Gerd) Finkbeiner and he said costs have to meet demands from the worldwide market,” said Karl Malik, a Germany-based consultant who tracks press suppliers.

Last year, MAN Roland reduced the number of employees on its payroll by 752. As part of the cost-savings effort, an additional 373 positions will be eliminated in the sheetfed unit. More jobs will likely come from sheetfed operations, MAN Roland said, along with unspecified “personnel adjustments” in the web press and sales portions of the company.

“The package is designed to continuously strengthen MAN Roland’s earning power and improve its market position,” a company spokesman said in a statement.

Restructuring, combined with declining sales, fueled a sharp drop in pre-tax earnings in 2002, the company said. MAN Roland posted pre-tax earnings of $10.8 million, some 90 percent lower than the $96 million in similar earnings the company reported in 2001.

New orders, meanwhile, dropped 23 percent between 2002 and 2001, falling to $1.67 billion. Web orders accounted for $667 million of the total, down 32 percent from year-earlier totals. Orders for sheet-fed and trade and services fell 16 percent and 11 percent, respectively.

MAN Roland said it posted revenues of $2 billion in 2002, a 13 percent drop from the $2.2 billion recorded in 2001. But web sales dropped only slightly, the company said, falling 2 percent.

Sales to countries outside of Germany represented almost 80 percent of total revenues in 2002, unchanged from 2001.

“The MAN Roland Druckmaschinen Group was able to hold its own in an exceptionally difficult market during the 2002 financial year,” the spokesman added. “Internationally, the situation in the graphic arts industry remains tense. Weaker demand means that competition and pricing pressures will continue to be tough. The underlying cause of the current situation is the slump in the advertising market that has made many printing companies and publishing houses put their investment plans, if only temporarily, on hold.”

Not surprisingly, the market’s weakness has translated into lower anticipated sales. MAN Roland said it had some $1 billion in orders on hand Dec. 31, 2002, 29 percent lower than the year-earlier period.