Agfa-Gevaert publishes its full year 2015 results – regulated information

Agfa-Gevaert today announced its full year 2015 results.

• Top line growth largely due to the success of the growth engines and the weaker Euro
• Gross profit margin improved to 31.9 percent of revenue
• Positive net result for third consecutive year
• Low level of net financial debt due to positive cash flow generation

 “Although 2015 was characterized by the further economic slowdown in several growth markets, we succeeded in stopping the top line erosion. The revenue growth was supported by the weaker Euro, as well as by the good performance of our growth engines, including Agfa Graphics’ inkjet business and Agfa HealthCare’s Direct Radiography and IT solutions. Furthermore, we also delivered on the other main targets we set ourselves. Mainly due to the improvement of our gross profit margin, we managed to bring our recurring EBITDA percentage closer to 10 percent of revenue. We will build on this achievement to reach the 10 percent target we have set ourselves for 2016. Our operational improvements and the success of our efficiency programs contributed to the improvement of our profitability. As a result of all this, we delivered a positive net result for the third year in a row. Together with the strict management of working capital, the net profit led to a positive cash flow generation and a strong decrease in our net financial debt. This set of results strengthens my belief that we are now set to achieve profitable growth in the years to come,” said Christian Reinaudo, President and CEO of the Agfa-Gevaert Group.

Agfa-Gevaert Group – full year 2015

(*) before restructuring and non-recurring items.

The Agfa-Gevaert Group’s revenue grew by 1.0 percent to 2,646 million Euro. The top line growth was supported by the good performance of most of the growth engines (including the Agfa Graphics business group’s inkjet business and the Agfa HealthCare business group’s Direct Radiography and IT solutions), as well as by the improved exchange rate situation. Adverse elements were the continuous decline of the traditional film businesses, the economic weakness in several emerging markets and the unstable geopolitical situation.

Targeted efficiency programs more than counterbalanced the adverse raw material effects (which mainly impacted the Agfa Graphics business group). As a result, the Group improved its gross profit margin from 30.8 percent of revenue in 2014 to 31.9 percent.  

As a percentage of revenue, Selling and General Administration expenses remained almost stable at 19.7 percent.

R&D expenses amounted to 144 million Euro, or 5.4 percent of revenue.

Recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) reached 9.1 percent of revenue, versus 8.5 percent in 2014. Recurring EBIT improved by one percentage point to 6.8 percent of revenue.

The expense related to the restructuring and non-recurring items amounted to 19 million Euro, versus 16 million Euro in 2014.

The net finance costs amounted to 74 million Euro, versus 59 million Euro in 2014. A substantial part of this amount – about 20 million Euro – is due to a reclassification in the fourth quarter from translation reserve to profit or loss with regard to the closure of two production plants. This reclassification has no cash impact. 

Income taxes resulted in an expense of 16 million Euro, versus an expense of 18 million Euro in the previous year. 

As a result of the elements mentioned above, the Agfa-Gevaert Group posted a strong net profit of 71 million Euro.

Financial position and cash flow

• At the end of 2015, total assets were 2,402 million Euro, compared to 2,548 million Euro at the end of 2014.
• Inventories amounted to 512 million Euro (102 days), versus 512 million Euro (102 days) in 2014. Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 374 million Euro (50 days), versus 413 million Euro (52 days) in 2014, and trade payables were 206 million Euro (41 days), versus 230 million Euro (46 days).
• Net financial debt amounted to 58 million Euro, versus 126 million Euro at the end of 2014.
• Net cash from operating activities amounted to 149 million Euro.

Agfa Graphics – full year 2015

(*) before restructuring and non-recurring items.

Agfa Graphics succeeded in reversing the downward revenue trend, despite the softness in the emerging markets and the political instability in certain regions. The top line was supported by positive currency effects, as well as by the double-digit growth of the inkjet segment, which was mainly due to the successful launch of the new generation of wide-format print solutions and the significant improvement in ink volumes. The strong competitive pressure in the offset markets continued to weigh on the prepress segment’s digital computer-to-plate (CtP) business. However, the volume trend in the CtP business started to improve towards the end of the year. The analog computer-to-film (CtF) business continued to decline strongly.

As Agfa Graphics’ structural efficiency measures counterbalanced the competitive pressure effects and the adverse raw material effects, the gross profit margin remained stable at 28.3 percent of revenue. Recurring EBITDA amounted to 94.7 million Euro (7.0 percent of revenue), versus 100.4 million Euro (7.4 percent of revenue) in 2014. Recurring EBIT reached 65.3 million Euro (4.8 percent of revenue) compared to 70.0 million Euro (5.2 percent of revenue).

Agfa HealthCare – full year 2015

(*) before restructuring and non-recurring items.

Driven by its growth engines and by positive currency effects, Agfa HealthCare posted a 2.8 percent revenue growth. 

In the Imaging segment’s digital radiography business (consisting of Computed Radiography (CR), Direct Radiography (DR) and the hardcopy business), the DR product range posted strong revenue growth. The hardcopy film product range performed well in the first three quarters of the year. In the fourth quarter, this business was influenced by Agfa HealthCare’s measures to align the inventory policy at the distributors’ level with the economic situation in the emerging markets in general and China and Latin America in particular. 

In the IT segment, the HealthCare Information Solutions range performed well. In the field of Imaging IT Solutions, Agfa HealthCare is building momentum with its new Enterprise Imaging Solution, especially in North America and Europe.

Mainly due to the success of its efficiency programs, Agfa HealthCare’s gross profit margin improved from 36.6 percent of revenue in 2014 to 37.9 percent. Recurring EBITDA improved from 114.4 million Euro (10.7 percent of revenue) in 2014 to 134.0 million Euro (12.2 percent of revenue). Recurring EBIT increased from 79.4 million Euro (7.4 percent of revenue) to 107.4 million Euro (9.8 percent of revenue).

Agfa Specialty Products – full year 2015

(*) before restructuring and non-recurring items.

Agfa Specialty Products’ revenue reached 189 million Euro. The good performances of the future-oriented businesses, such as Orgacon Electronic Materials and Synaps Synthetic Paper, as well as the Printed Circuit Board business partly counterbalanced the decline of the traditional film product lines.

The business group’s recurring EBITDA reached 16.7 million Euro (8.8 percent of revenue). Recurring EBIT increased to 12.7 million Euro (6.7 percent of revenue).

Outlook

The Agfa-Gevaert Group has set itself two clear targets for 2016. 

Firstly, the Group aims to deliver a recurring EBITDA percentage of 10 percent of revenue. 

In spite of the uncertain geopolitical conditions and the continuous economic slowdown in several important growth markets, the second target is to achieve further top line growth. Based on the success of the growth engines, as well as on targeted acquisitions, the Group expects that it will be able to grow its full year revenue to 3 billion Euro in the medium term. 

Christian Reinaudo, President and CEO of the Agfa-Gevaert Group, said: “All our business groups have technology leading products and solutions. We also have the right people and know-how to be successful in our markets. Therefore, I am confident that we will succeed in growing our company in a profitable way.”

Fourth quarter results

Agfa-Gevaert Group – fourth quarter 2015

(*) before restructuring and non-recurring items.

In spite of the continuous good performance of the growth engines and positive currency effects, the Agfa-Gevaert Group’s revenue decreased by 5.5 percent to 672 million Euro. The Group’s top line was impacted by the adjustment of Agfa HealthCare’s inventory policy for hardcopy, by the economic downturn in the emerging markets and by the continuous decline of the traditional film businesses.

As targeted efficiency programs counterbalanced the effects of the temporary revenue drop of Agfa HealthCare’s hardcopy film, the Group’s gross profit margin remained almost stable at 31.0 percent of revenue.

As a percentage of revenue, Selling and General Administration expenses amounted to 19.2 percent of revenue, versus 18.3 percent in the fourth quarter of 2014.

R&D expenses amounted to 35 million Euro, or 5.2 percent of revenue.

Recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) reached 9.7 percent of revenue, compared to 10.4 percent in the fourth quarter of 2014. Recurring EBIT amounted to 7.4 percent of revenue, versus 7.9 percent.

The expense related to the restructuring and non-recurring items amounted to 4 million Euro, versus 8 million Euro in the fourth quarter of 2014.

The net finance costs amounted to 31 million Euro, a substantial part of which is due to a reclassification in the fourth quarter from translation reserve to profit or loss with regard to the closure of two production plants. This reclassification has no cash impact.

As a result of the elements mentioned above, the Agfa-Gevaert Group’s net profit amounted to 10 million Euro.

Agfa Graphics – fourth quarter 2015

(*) before restructuring and non-recurring items.

The tough conditions in the emerging markets and the political instability in certain regions continued to weigh on Agfa Graphics’ top line. In the fourth quarter, the inkjet segment continued to perform strongly. In spite of the competitive pressure, the volume trend in the prepress segment’s digital computer-to-plate (CtP) business started to improve. The analog computer-to-film (CtF) business continued to decline strongly.

Mainly due to its efficiency projects, Agfa Graphics’ gross profit margin improved from 28.0 percent of revenue in the fourth quarter of 2014 to 28.3 percent. Recurring EBITDA amounted to 28.9 million Euro (8.3 percent of revenue), versus 29.0 million Euro (8.0 percent of revenue) in the fourth quarter of 2014. Recurring EBIT improved from 21.2 million Euro (5.9 percent of revenue) to 22.2 million Euro (6.3 percent of revenue).

In the field of inkjet, Agfa Graphics won no less than three Product of the Year awards in the UV category at the SGIA Expo 2015 (Atlanta, Georgia, USA). The award-winning print engines were Anapurna M2540i, Jeti Mira and Jeti Tauro. In the fourth quarter, the Anapurna and Jeti wide-format print engines and the related ink portfolio continued to convince printers all over the world of their many advantages. Accu-Decal, Inc. (USA) became the first printing location in North America to install the versatile flatbed Jeti Mira print engine. West Star Printing (Canada) and Comdatek (Germany) both bought their second Jeti Tauro system. Other high-end Jeti print engines were sold to – among other companies – Bestseller (Denmark); Catalyst Graphics and Clegg Media (both in Australia); SpeedPro Imaging (USA).

In the field of prepress, an eye-catching consumables and equipment contract was signed with the Ebner & Spiegel print house in Ulm, Germany. The print house is part of the CPI Group, which is one of the largest book printers in Europe. Agfa Graphics also signed a three-year printing plate contract with the international packaging group STI for its sites in Germany and Hungary. Furthermore, Cimpress (know for VistaPrint and many other brands) selected Agfa Graphics’ Energy Elite Pro printing plates for its site in the Netherlands. Other major prepress contracts were signed with – among other companies – the LGR Group and the Ebra Group (both in France); Asbury Park Press, Slate Group/Capital Printing and Billy K (all in the USA). 

Agfa Graphics also continued to expand its customer base in the Japanese market. The Nikkei Newspaper company, for instance, installed 2 additional chemistry-free CtP production lines from Agfa Graphics, bringing the total to 4. Nikkei is the largest financial newspaper in the world. The Nishikawa Group became the first Japanese company to start using the Agfa Graphics’ Apogee Prepress workflow solution as a cloud service.

In November, Agfa Graphics was honored with the Belgian Supply Chain Award 2015 for a project concerning the supply chain of aluminum printing plates. The award-winning sustainable closed-loop solution allows high-grade aluminum to be reused without value loss.

Agfa HealthCare – fourth quarter 2015

(*) before restructuring and non-recurring items.

The fourth quarter top line decline is mainly due to Agfa HealthCare’s inventory decisions in the hardcopy film business. These decisions aim to better align the inventory policy at the distributors’ level to the current economic situation in certain emerging markets, including China and Latin America. In the mature markets, the business group posted top line growth. 

In the Imaging segment’s digital radiography business, the DR product range’s revenue continued to grow strongly. 

In the IT segment, the HealthCare Information Solutions range posted revenue growth. In the field of Imaging IT Solutions, the order book and the installed base for the new Enterprise Imaging platform are growing steadily.

Mainly due to the inventory measures for hardcopy film, Agfa HealthCare’s gross profit margin decreased from 38.0 percent of revenue in the very strong fourth quarter of 2014 to 36.0 percent. Recurring EBITDA decreased from 43.2 million Euro (14.3 percent of revenue) to 34.2 million Euro (12.4 percent of revenue). Recurring EBIT amounted to 27.6 million Euro (10.0 percent of revenue), versus 34.6 million Euro (11.4 percent of revenue).

In the field of Imaging, Agfa HealthCare signed several eye-catching contracts for its advanced digital radiography solutions. In the US, the Rush University Medical Center (Chicago) ordered three DX-D 600 DR systems and one DX-D 300 DR system. The Rotherham NHS Foundation Trust and the Yeovil District Hospital were the first care organizations in the UK to order the recently launched DR 600 X-ray room. An extensive DR contract – including DR 600 X-ray rooms, as well as mobile DR solutions – was also signed with the Klinikum Ludwigsburg (Germany).

In the field of Imaging IT Solutions, Agfa HealthCare has been identified as the Number 1 Enterprise Imaging IT vendor in the 2015 Trends in Medical Imaging Technology Report, published by peer60. The report is based on an industry survey of over 500 healthcare providers. In the fourth quarter, Agfa HealthCare announced that it had acquired over 250 new agreements for its Enterprise Imaging Solution since its launch. One of the most eye-catching contracts of the fourth quarter was signed with Västra Götalandsregionen in Sweden. The agreement lays out standard terms under which the 18 hospitals in the region can implement Agfa HealthCare’s Enterprise Imaging for Radiology suite at their own pace. The first implementation will take place in Sahlgrenska University Hospital (Gothenburg), the largest hospital in Northern Europe. In the Middle East, comprehensive Enterprise Imaging Solutions were ordered for the American University of Beirut Medical Center and the Royal Commission Medical Center (Yanbu, Saudi Arabia). The Admiraal de Ruyter Ziekenhuis in Goes became the first hospital in the Netherlands to implement Agfa HealthCare’s Enterprise Imaging for Radiology Solution.

In the field of HealthCare Information Solutions, Agfa HealthCare confirmed its leading position in the German speaking region of Europe. In the fourth quarter, new contracts were signed with – among other care providers – the Psychiatrieverbunde St. Gallen, the Klinikum Delmenhorst and the St. Josef Stift Delmenhorst.

Agfa Specialty Products – fourth quarter 2015

(*) before restructuring and non-recurring items.

Agfa Specialty Products’ revenue amounted to 47 million Euro. The decline of the traditional film businesses was largely counterbalanced by the strong performance of Printed Circuit Board film, Orgacon Electronic Materials and the Security product range.

The business group’s recurring EBITDA reached 2.9 million Euro (6.2 percent of revenue). Recurring EBIT increased to 1.9 million Euro (4.0 percent of revenue).

In November, Agfa Specialty Products signed two development agreements in the Printed Circuit Board business area. Firstly, the business group joined forces with MGI Digital Technology to develop and launch the world’s first industrial inkjet solution for the printed electronics market. Secondly, Agfa Specialty Products entered into an alliance with Electra Polymers for the development of inkjet solder mask technology.

Management Certification of Financial Statements and Quarterly Report

This statement is made in order to comply with new European transparency regulation enforced by the Belgian Royal Decree of 14 November 2007 and in effect as of 2008.

“The Board of Directors and the Executive Committee of Agfa-Gevaert NV, represented by Mr. Julien De Wilde, Chairman of the Board of Directors, Mr. Christian Reinaudo, President and CEO, and Mr. Kris Hoornaert, CFO, jointly certify that, to the best of their knowledge, the consolidated financial statements included in the report and based on the relevant accounting standards, fairly present in all material respects the financial condition and results of Agfa-Gevaert NV, including its consolidated subsidiaries. Based on our knowledge, the report includes all information that is required to be included in such document and does not omit to state all necessary material facts.”

Statement of risk

This statement is made in order to comply with new European transparency regulation enforced by the Belgian Royal Decree of 14 November 2007 and in effect as of 2008.

“As with any company, Agfa is continually confronted with – but not exclusively – a number of market and competition risks or more specific risks related to the cost of raw materials, product liability, environmental matters, proprietary technology or litigation.”

Key risk management data is provided in the annual report available on www.agfa.com.

Confirmation Information – press release Agfa-Gevaert NV

The statutory auditor, KPMG Bedrijfsrevisoren – Réviseurs d’Entreprises, represented by Filip De Bock, has confirmed that the audit procedures, which have been substantially completed, have not revealed any material misstatement in the accounting information included in the Company’s annual announcement. 

Kontich, March 9 2016 

KPMG Bedrijfsrevisoren / Réviseurs d’Entreprises 

Represented by 

Filip De Bock 

Partner

Click here for Agfa’s consolidated statements.