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Remarks by Gerald Böse - Annual press conference

Remarks by Gerald Böse, Chief Executive Officer of Koelnmesse, at the annual press conference, July 1, 2010,
11:00 a.m.; in the Entrance South at the Cologne exhibition center

Check against delivery!
This year, we've moved the press conference to the Entrance South at the Cologne exhibition center so that you can directly experience just how flexible our trade fair site is. An area that will once again welcome tens of thousands of visitors a day to gamescom in a few weeks requires an expansive and well equipped entrance. At the same time, with creativity and good concepts, presentations, conferences, and exhibitions can also be successfully staged in such an area - as was demonstrated by the unveiling of the new Audi A8 just a few weeks ago. Thanks to such an approach, we will be able to expand our Special Events business area. Recently, Germany's most important event and live marketing agencies experienced the benefits offered by Cologne as a trade fair venue during our "Eventday." In just a few moments, I will use the thematic islands you see here to provide an overview of what we believe will be the key business sectors of the future. That too represents a premiere.

First, however, I would like to review business developments at Koelnmesse in 2009 and during the first few months of 2010. The new, more relaxed environment for this year's press conference should also make it easier to establish more direct contact with you. This is important, because media coverage has a major impact on the success of trade fairs, in both a positive and negative sense. Our events would be less successful without the extensive coverage they receive. At the same time, certain types of speculation - such as rumors concerning the impending loss of our trade fair halls - generate uncertainty among our customers, business associations, exhibitors, visitors, and organizers of guest events. That's why I want to conduct a close and extensive dialog with you on key issues. Mayor Roters just explained to you how important the trade fair business is for our city and region.

At ¤229 million, revenues in business year 2009 were the highest in Koelnmesse's history, and with 78 trade fairs and exhibitions in Germany and abroad, we also organized more events than ever before. A total of 35,000 exhibiting companies and more than 1.6 million visitors participated in these events. These numbers indicate solid success, especially given the strong negative impact the global financial and economic crisis has had on some sectors. Germany's AUMA trade fair association describes 2009 as the "most difficult year since the end of the New Economy boom in 2002." Trade fair companies serving a broad mix of sectors are faring the best, according to AUMA. Koelnmesse is just such a trade fair company, and it remains one of the biggest and most important in the global trade fair industry.

At ¤19.9 million, the loss recorded by the Group in 2009 was lower than expected. Structural cost-reduction measures - none of which were related to any of our events - now amount to ¤10 million per year. And these cuts positively affect the year under review. In addition, our trade fair business in Cologne and abroad developed in a much better manner than was to be expected given the crisis. Earnings before interest, taxes, depreciation, and amortization (EBITDA), including property tax, were clearly positive at ¤7.1 million. What's more, our trade fair-specific result (EBITDA before rental costs for the halls) was actually around ¤30 million.

In other words, we would clearly be in the black if it weren't for the huge rental costs associated with the exhibition center. I'm not trying to downplay the loss in 2009; instead, I'm simply putting it in perspective. In a period in which many trade fair companies - some of which have significantly lower site costs - are experiencing losses totaling tens or even hundreds of millions, our operating performance is basically an inversion of our exhibition center costs. Due to the trade fair cycle, 2010 will be a very weak year in terms of events, with comparatively few major fairs. However, even in 2010, we will achieve a positive trade fair-specific result - despite the fact that hall rental fees and depreciation might produce a higher loss than in 2009.

Koelnmesse and its shareholders are doing everything in their power to ensure that the company's overall earnings will be in the black again as soon as possible. As I've already mentioned, costs associated with the trade fair site are a key factor here. Mayor Roters has already informed you of the current status of negotiations with the Oppenheim-Esch Fund. We are convinced that we will ultimately be able to obtain a realistic and affordable rental fee for Koelnmesse.

We continue to move forward in other areas as well. In addition to the 2012plus efficiency program launched in 2008, we have implemented many internal measures that will ensure the future viability of Koelnmesse and enable us to make the efficiency improvements we've been talking about. For example, we are now reintegrating our Koelnmesse Service GmbH and Koelnmesse International GmbH subsidiaries back into the Group. We're also transforming several foreign subsidiaries into independent representative offices. The number of managing directors has been reduced from five to three, and the business units are being consolidated on the basis of thematic areas in order to further improve the exploitation of personnel and content synergies between individual events in the future. As a result, we'll have around 80 fewer positions, whereby we're not planning any layoffs due to business reasons. Our trade fair operating business activities are focusing on the profitable expansion of our existing events and the development of new future-oriented trade fair themes. Here, we'll be able to rely on the support of our shareholders, as has already been demonstrated by the cash-pooling agreement with the city of Cologne, for example.

We have a good chance of implementing our structural measures. Despite the economic and financial crisis, our events in 2009 and in the first half of 2010 proved to be very robust. Many of them bucked the general trend and grew; examples here include the IDS International Dental Show, ProSweets Cologne, Kind+Jugend, Anuga FoodTec, and spoga horse. The premieres for gamescom and dmexco were also extremely successful, while many well-established events like Anuga and the ISM International Sweets and Biscuits Fair went well, or are regaining their former status.

Eleven of the 78 fairs and exhibitions that took place in 2009 were premieres, and this year 12 events will be staged by Koelnmesse for the first time. The company thus remains an innovation leader among its rivals in Germany and around the world. Last year, 25 of Koelnmesse's events were held abroad, most of them in China and India. In 2010, we will organize a record number of 33 trade fairs abroad. In 2009, outside organizers staged 25 trade fairs and exhibitions at our exhibition center and booked our services. These events included eight premieres and attracted 6,900 exhibitors and 246,000 visitors. This year, Koelnmesse Ausstellungen GmbH will help stage 21 shows of outside organizers, two of which will be held in Cologne for the first time. As you can see, word is getting around that we have an attractive exhibition center - and we've always said that such an asset represents a key competitive advantage. In terms of customer response, we are reaping the benefits of the top-quality services we provide, our unique location near downtown Cologne - which can be reached easily and quickly - and our outstanding infrastructure and facilities.

That was a brief overview of our key figures. I'd now like to talk about further measures we plan to implement. In general, our goal is to also ensure that our events and our own capabilities contribute to the success of the Group as quickly and as extensively as possible. We have a plan, and we're currently in the middle of implementing it. You can see five symbols and five headlines, each referring to a key area where we're taking action.

Safeguarding existing eventsIt may not be a spectacular approach, but as far as we're concerned, the most important and sustainable method for achieving business success is to further develop our existing events, some of which have remained extremely successful for decades now. Koelnmesse has a strong portfolio that includes the number one fairs in approximately 25 business sectors.

That we're also able to generate new momentum for long established events is demonstrated by imm cologne, which faces strong competition from other furniture fairs, especially in European countries outside Germany. This kitchen unit you see here symbolizes how, together with the sector, we will be adding kitchens - a segment long missing from the fair - to the 2011 imm cologne program in the form of LivingKitchen®. What's more, we will also significantly improve the fair's event character and thus its appeal to consumers. With PURE TEXTILE, we've also succeeded in expanding our carpet and textile program, and thus our expertise in those segments.

Still, it's important that we keep in mind how important it is to continually further develop and improve such events. Among other things, we need to maintain an ongoing dialog with exhibitors and visitors, be aware of their requirements, and work with them to plan and implement structures for the respective fairs. Leading trade fairs like Anuga, photokina, the International Hardware Fair, and Orgatec are subject to various types of influences and changes that need to be reflected in the design and content of the trade fair halls. Put simply, our events must serve as forums for the future development of their respective sectors, while at the same time generating important business momentum.

To ensure that this happens, we are restructuring our organization, whereby the focus is on direct contact with our most important customers via the right contact partners. We're also taking a completely new approach to keeping our customers in contact with one another. imm cologne, for example, will be the first trade fair to feature our "BusinessEnergizer365" online platform. This tool, which is unique in the trade fair industry, brings together purchasers and other interested parties with appropriate suppliers throughout the year. As a year-round model, such "business matchmaking" via digital media ideally supplements the trade fair as a communication medium. We thus continue to move ahead with our activities in this sector.

There are many other examples that demonstrate how existing trade fairs have developed positively. They include Anuga, ART COLOGNE, and Kind+Jugend. Our goal is to provide selected business sectors with the most extensive services and opportunities possible and by doing so safeguard and expand our flagship leading fairs. We've already succeeded in achieving this goal in the furnishing and nutrition segments, to name just two examples…

Media trade fairs… and we've also succeeded to a large extent in this regard with media trade fairs, for which we are now the number one location, as this figure symbolizes. This became very apparent at two successful premieres that we celebrated in 2009: gamescom, which immediately attracted nearly 250,000 participants, and dmexco, which is the leading trade fair for the digital advertising industry. We currently have eight media trade fairs in our Cologne program. Alongside the two I just mentioned we also have, of course, photokina, the Role Play Convention, medienforum.nrw, and three shows of outside organizers: Radio Day, PMRExpo, and ANGA Cable.

It makes sense to prioritize the development of this trade fair segment in Cologne, which as you know is a major media center. In fact, the interaction between our fairs and the media companies here in the region also serves to stimulate economic activity in the city. For example, with its many events and concerts spread throughout the entire city, gamescom offers an additional reason for people to come to Cologne, and also generates additional revenues potential.

Our media trade fair program continues to grow. In May, for example, we very successfully launched ConLife, our first home networking specialist conference, which also featured an accompanying exhibition. Last week saw the premiere of the C'n'B - CREATIVE BUSINESS CONVENTION, which is a new forum for the creative industries. This event was held during c/o pop and was supported by Koelnmesse.

As you can see, ladies and gentlemen, the trade fair industry still harbors great potential. The generation of new business is not only possible…

New business… but also a key component of our focus on the future - particularly here in Cologne. As things stand now, 18 premieres - nine in Cologne and nine abroad - will be added to the Koelnmesse portfolio in 2010 and 2011. New business will thus form an important foundation for future success. Our new business addresses forward-looking topics whose market potential can be greatly expanded in our opinion. Internal development of new concepts represents one side of the coin here; acquisitions are the other.

This electric car you see here symbolizes our own developments - in this case the expert get-together of the German Electrical and Electronic Manufacturers' Association that included the premiere of the elektro:mobilia exhibition organized by Koelnmesse. Both the conference and the exhibition will once again be held at the Cologne exhibition center in February 2011. June saw the launch of PerMediCon as a new type of forum for the interdisciplinary exchange of information in the field of personalized medicine. And yesterday we created a new congress trade fair for innovative lightweight materials in cooperation with the North Rhine-Westphalia Cluster NanoMicro and Materials.

These examples make it clear that we must provide custom-tailored formats for special themes. The future belongs to the combination of congresses in cooperation with related specialist institutions and an exhibition with which we can offer added value to the participating business sectors. At least this is the case, when it comes to these technology and know-how dominated themes. Such events have enormous potential and are investments in the targeted expansion of a diverse, future-oriented portfolio that includes a wide range of themes.

The acquisition of existing events usually results in a more rapid return on investment. With Intermot, gamescom, and dmexco we have proven that we can provide a home venue for new themes and make them successful right from the start. That we can do so is due not only to innovative concepts, but also to the flexibility of our exhibition center and our unique catchment area. Millions of consumers and the strong economic power of the region distinguish us from other locations. USETEC, the World Trade Fair for Used Technology, is coming to Cologne in April 2011, and we expect about 450 suppliers and 10,000 visitors to take part in this event.

The global market:Nine of our premieres in 2010 and 2011 will take place abroad. At last year's press conference we emphasized that we want to concentrate on profitable growth in the booming regions of China, India, and Southeast Asia. And, in fact, today we are currently recording profits with our events abroad. Considering how well the economies in Asia are recovering from the financial crisis, their position as an autonomous center of business is becoming stronger and the importance of Asian trade fairs for Asian companies is increasing.

Several of our trade fairs abroad are already the leading events for their region. These include, for example, the China International Hardware Show, which is Number 2 worldwide after the International Hardware Fair in Cologne; interzum guangzhou, Asia's biggest woodworking machinery and furniture production fair; or THAIFEX - World of Food Asia, one of the biggest Asian food trade fairs. In India we now organize 13 trade fairs, including a number of successes such as the dental trade fair IDEM India, which attracted nearly 150 exhibitors to Mumbai; and last February's IFEX India, which celebrated its debut in 2003 and is today the leading trade fair for foundry technology.

An essential factor for the success of business abroad is our exhibitors' trust in our sector expertise and our ability to present events in the relevant markets. This confidence has also been repeatedly strengthened thanks to our EXPO commitment - particularly now that we are operating the largest German pavilion in Shanghai, at the largest world exhibition of all time for the German Federal Ministry of Economics. Here you can see the EXPO mascot. Its name is "Haibao" - which means treasure of the sea. Three years of preparations were required for the project. Now a ten-person team from Cologne is responsible for the operation of the 6,000-square-meter pavilion with 250 hostesses and hosts and 25,000 visitors each day, who sometimes wait for between three and four hours to get in. The German Pavilion, which is called "balancity - a city in balance," stands for balance in urban life. It has already attracted tremendous media coverage in the two months since EXPO opened. Success stories like this also enhance our reputation.

And, of course, having a good reputation as an organizer of trade fairs abroad also helps us to attract exhibitors and visitors to the fairs in Cologne. Our activities outside of Germany are definitely attracting additional trade fair guests to the Rhine.

Promoting our location
We're pleased about all this - and not just as a trade fair organizer. We see ourselves as a part of this business location, to which we want to lend momentum, but from which we also expect support. Our mayor has pointed out our company's role as an attractive business-promoting instrument with worldwide renown. We also expect, however, that the region feels that it is a co-host and also makes our guests feel welcome. With our trade fairs, we create events that are attended by millions of people, year after year. We also strive to ensure - just like the link between the banks of the Rhine you see recreated here - that Cologne and the region profit even more from the major trade fairs and are strongly engaged in activities related to the fairs. That is the aim of the initiative "Trade fair city of Cologne," which we founded together with the mayor last December. Business development agencies, City-Marketing Köln, the Cologne Chamber of Commerce and Industry, the retail trade, the catering and hotel trade, transport services, conference and tourism organizations, public facilities and companies - all of them have since then been helping to bring the key themes of our public trade fairs into the city. A total of six new events are scheduled for 2010: the events for gamescom in August, for Kind+Jugend and for photokina in September, and for Intermot in October are still to come.

We are basing our plans on the fact that, despite the calls for cuts in spending, the promotion of business in this region will not be neglected. We are happy to do our part to support and further promote the marketing of our city and its reputation as an attractive destination. A thriving economy is also a prerequisite for making this city a community with a high quality of life.

I hope, ladies and gentlemen, that I have given you an overview of our plans. As you can see, we will not stand by passively and accept negative annual results. It is our responsibility, and part of our self-image, to increase the earnings from our core business. In the near future, we want to be "in the black" not only in terms of our business operations, but also across the board.

And we intend to achieve this aim - with the support of our shareholders, with a strict savings and efficiency-boosting program, and with an effective mix of measures to be implemented in our core business.

We would like to stay in touch with you in the future, in order to keep you appropriately informed of events and similar services. That's why we would like to ask for your consent to contact via electronic media.

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