Agfa-Gevaert publishes its second quarter 2018 results – regulated information

Press Release / Mortsel, Belgium / 22nd August 2018


·         Top line decline of 3.6% excluding currency effects and prepress portfolio rationalization

·         Strong performance of Agfa Specialty Products and further recovery of Agfa HealthCare’s hardcopy business

·         Recurring EBITDA at 49 million Euro

·         Net profit at 6 million Euro

·         Net financial debt at 55 million Euro

Mortsel (Belgium), August 22, 2018 – Agfa-Gevaert today announced its second quarter 2018 results.

“The first six months of 2018 did not yield any major surprise. Excluding the portfolio reorganization in the Agfa Graphics business group’s prepress business and currency effects, our top line evolved as expected with a decline rate lower than in last year’s first half. Agfa Graphics continued to face challenges in the prepress market: ongoing decline for analog computer-to-film products, competitive pressure, market-driven volume declines for digital computer-to-plate products, and high aluminum prices. We therefore announced a global price increase program for our prepress printing plates in May. Furthermore, we will continue to look into initiatives to actively participate in the necessary consolidation of the industry.

We also made good progress with the reorganization of our HealthCare IT activities into a stand-alone legal entity structure within the Group. This major step in our history addresses the complexity of our company. When completed, the project will allow both the HealthCare IT activities and the remaining part of the Group to pursue growth in the years to come.

Repeating the guidance included in the first quarter publication, we do not expect our full year recurring EBITDA margin to be above the margin reached in 2017. However, we stick to our ambition to target a recurring EBITDA margin of around 10% of revenue on average in the years to come,” said Christian Reinaudo, President and CEO of the Agfa-Gevaert Group.

Agfa-Gevaert Group – second quarter 2018

in million Euro Q2 2017 Q2 2018 % change
Revenue 622 559 -10.0%
Gross profit (*) 213 180 -15.5%
% of revenue 34.3% 32.2%
Recurring EBITDA (*) 60 49 -19.5%
% of revenue 9.7% 8.7%
Recurring EBIT (*) 45 35 -24.9%
% of revenue 7.6% 6.3%
Result from operating activities 45 26 -41.3%
Result for the period 27 6
Net cash from (used in) operating activities (39) (11)

(*) before restructuring and non-recurring items

The Agfa-Gevaert Group’s top line evolution was strongly impacted by the previously announced product portfolio reorganization in the Agfa Graphics business group’s prepress business and by the strength of the Euro. Excluding these elements, the Group’s revenue decline was limited to 3.6%. The Agfa HealthCare business group’s hardcopy film business continued to recover following the reorganization of the Chinese distribution channels in 2017. Based on the success of several of its future-oriented products, the Agfa Specialty Products business group performed well.

The Group’s gross profit margin amounted to 32.2% of revenue, which is in line with the first quarter of the year.

As a percentage of revenue, Selling and General Administration expenses remained almost stable at 21.2% of revenue.

R&D expenses amounted to 35 million Euro, or 6.3% of revenue.

Recurring EBITDA reached 8.7% of revenue, versus 9.7% in the second quarter of 2017. Recurring EBIT reached 6.3% of revenue.

Restructuring and non-recurring items resulted in an expense of 9 million Euro, versus an expense of 2 million Euro in the previous year.

The net finance costs increased from 8 million Euro in the second quarter of 2017 to 10 million Euro.

Income tax expenses remained stable at 10 million Euro.

As a result of the elements mentioned above, the Agfa-Gevaert Group posted a net profit of 6 million Euro.

Financial position and cash flow

  • At the end of the second quarter of 2018, total assets were 2,293 million Euro, compared to 2,233 million Euro at the end of 2017.
  • Trade working capital moved from 644 million Euro (26% of sales) at the end of 2017 to 646 million Euro (27% of sales) at the end of the second quarter of 2018.
  • Net financial debt amounted to 55 million Euro, versus 18 million Euro at the end of 2017.
  • Net cash from operating activities amounted to minus 11 million Euro.

 

Agfa Graphics – second quarter 2018

in million Euro Q2 2017 Q2 2018 % change
Revenue 309 261 -15.5%
Recurring EBITDA (*) 23.0 12.9 -44.0%
% of revenue 7.4% 4.9%
Recurring EBIT (*) 16.9 7.0 -58.8%
% of revenue 5.5% 2.7%

(*) before restructuring and non-recurring items

Excluding the effects of the strength of the Euro and of the decision to discontinue certain prepress-related reseller activities in the United States, Agfa Graphics’ top line decreased by 6.5%. The prepress segment’s top line was impacted by the strong market-driven decline for analog computer-to-film products and by the pressure on volume for the digital computer-to-plate product offerings. Price pressure in this segment eased due to the recently announced global price increase program for printing plates.

In May, Agfa Graphics introduced its new hybrid Jeti Tauro H3300 LED print engine. Reluctance to invest in anticipation of the new machine partly explains the somewhat sluggish equipment sales in the inkjet segment. On the other hand, the ink portfolio evolved according to plan.

Mainly due to product and regional mix effects, as well as the high aluminum price, Agfa Graphics’ gross profit margin decreased from 30.4% of revenue in the second quarter of 2017 to 27.0%. Recurring EBITDA amounted to 12.9 million Euro (4.9% of revenue), versus 23.0 million Euro (7.4% of revenue) in the second quarter of 2017 and recurring EBIT reached 7.0 million Euro (2.7% of revenue), versus 16.9 million Euro (5.5% of revenue).

In the field of prepress, Agfa Graphics released its InkTune and PressTune software solutions, which give print houses complete control over all printing elements, from ink use to compliance with ISO, G7 and client-specific standards, while reducing production costs. The solutions are part of Agfa Graphics’ ECO³ program, which aims to make prepress and printing operations cleaner, more cost effective and easier to manage and maintain.

In the Oceania region, Agfa Graphics signed a multi-year agreement with Orora Cartons to supply digital printing plates to the packaging group’s three sites in Australia and two sites in New Zealand. In Turkey, a major prepress contract – including printing plates, several platesetters, and workflow software – was signed with the Turkuvaz company. Other important prepress contracts were signed in – among other countries – Poland, Belgium, Luxemburg, Israel, Saudi Arabia, Iran, Japan, Brazil and Jordan.

In the field of inkjet, Agfa Graphics introduced its new flagship UV LED inkjet printer: the hybrid Jeti Tauro H3300 LED. The engine guarantees both smooth, detailed results and rapid UV LED curing.

In June, Agfa Graphics invited over 300 print service providers, influencers and trade press members to an exclusive Red Carpet Event at its head office in Belgium. Attendees were able to learn more on the new Jeti Tauro H3300 LED machine and Agfa Graphics’ other inkjet solutions.

Bright Print Group (Sydney, Australia) recently installed a Jeti Mira LED print engine, which now runs alongside two Anapurna engines. Jeti Tauro LED machines were bought by – among other companies – Médiafab (France) and Partners Studio Potrzebowski (Poland). Other important inkjet contracts were signed with – among other companies – AAZ, Agency Technical Service, LSEP and Diazo (all in France); Ergraf (Poland); Drukkerij van Deventer (the Netherlands); Krekels and XXL Printshop (both in Belgium); Horiuchi Color Co. (Japan); CyberDoc (Brazil).

Agfa HealthCare – second quarter 2018

in million Euro Q2 2017 Q2 2018 % change
Revenue 263 248 -5.7%
Recurring EBITDA (*) 32.1 29.7 -7.7%
% of revenue 12.2% 12.0%
Recurring EBIT (*) 25.7 23.4 -9.1%
% of revenue 9.8% 9.4%

(*) before restructuring and non-recurring items

Excluding the effects of the strong Euro, Agfa HealthCare’s revenue decrease was limited to 1.4%.

Following the reorganization of the Chinese distribution channels in 2017, the hardcopy business posted satisfactory volume growth. The HealthCare Information Solutions range reported continuous top line and order book growth. Following a strong start to the year, the Imaging IT Solutions range somewhat slowed down in the second quarter.

Agfa HealthCare’s gross profit margin reached 38.9% of revenue, versus 39.9% in the second quarter of 2017. Recurring EBITDA decreased from 32.1 million Euro (12.2% of revenue) in the second quarter of 2017 to 29.7 million Euro (12.0% of revenue). Recurring EBIT reached 23.4 million Euro (9.4% of revenue), versus 25.7 million Euro (9.8% of revenue) in the previous year.

In the field of Imaging, Agfa HealthCare received FDA 510(k) clearance for its DR 800 multi-purpose imaging system. The solution covers radiology, fluoroscopy and advanced clinical applications. New customers for the system included Newton-Wellesley Hospital (USA) and the Royal United Hospitals Bath NHS Foundation Trust, which installed the first DR 800 system in the UK. In the US, Agfa HealthCare installed two DX-D 300 direct radiography (DR) systems at the Centers for Advanced Orthopaedics, Potomac Valley Orthopaedic Associates Division, replacing an early-generation DR system. In the UK, the business group installed two DR 600 X-ray rooms at Hove Polyclinic, part of Brighton and Sussex University Hospitals NHS Trust. Also in the UK, the Wrightington, Wigan and Leigh NHS Foundation Trust has implemented Agfa HealthCare’s DR Retrofit solution at three of its sites.

In the field of Imaging IT Solutions, Agfa HealthCare announced the signing of a 10-year managed services contract for Enterprise Imaging with the North West Anglia NHS Foundation Trust (UK). In Ireland, Agfa HealthCare installed its Enterprise Imaging for Radiology platform at the Aut Even Hospital in Co. Kilkenny. The Aga Khan DeveIopment Network became Agfa HealthCare’s first Enterprise Imaging customer in Tanzania. In June, the business group announced that the latest version of its Enterprise Imaging solution is operational at twenty-one health care systems throughout North America. The installations range from community hospitals to academic and large multi-hospital health systems.

In HealthCare Information Solutions, Agfa HealthCare confirmed its leading position in Germany. For example, the business group announced the successful go-live of its ORBIS solution at the St. Gallischen Psychiatrie-Dienste Süd.

In the field of Integrated Care (IC), Agfa HealthCare acquired the French e-health software solution specialist Inovelan, which will contribute to the enhancement and extension of Agfa HealthCare’s own IC portfolio.

 

Agfa Specialty Products – second quarter 2018

in million Euro Q2 2017 Q2 2018 % change
Revenue 49 50 1.4%
Recurring EBITDA (*) 6.1 6.9 12.0%
% of revenue 12.4% 13.7%
Recurring EBIT (*) 5.3 5.9 10.6%
% of revenue 10.8% 11.8%

(*) before restructuring and non-recurring items

 Agfa Specialty Products’ top line grew by 1.4% (2.6% excluding currency effects) to 50 million Euro. Synaps Synthetic Paper, Security and the Specialty Chemicals business performed particularly well.

The business group’s recurring EBITDA improved to 6.9 million Euro (13.7% of revenue). Recurring EBIT amounted to 5.9 million Euro (11.8% of revenue).

In the second quarter, Agfa Specialty Products’ PETix film solution was selected as core material for the production of Ecuador’s new electronic ID card.

In April, Agfa Specialty Products and the Italian company De Nora signed an agreement for the development of a solution for hydrogen and oxygen production based on Agfa Specialty Products’ Zirfon Perl membrane.

Results after six months

Agfa-Gevaert Group – year to date

in million Euro H1 2017 H1 2018 % change
Revenue 1,210 1,108 -8.4%
Gross profit (*) 405 358 -11.7%
% of revenue 33.5% 32.3%
Recurring EBITDA (*) 99 86 -13.2%
% of revenue 8.2% 7.8
Recurring EBIT (*) 73 60 -17.9%
% of revenue 6.0% 5.4%
Result from operating activities 68 46 -32.3%
Result for the period 35 13
Net cash from (used in) operating activities (1) (4)

(*) before restructuring and non-recurring items

Agfa Graphics – year to date

in million Euro H1 2017 H1 2018 % change
Revenue 609 520 -14.6%
Recurring EBITDA (*) 42.8 21.1 -50.8%
% of revenue 7.0% 4.1%
Recurring EBIT (*) 30.5 9.3 -69.6%
% of revenue 5.0% 1.8%

(*) before restructuring and non-recurring items

Agfa HealthCare – year to date

in million Euro H1 2017 H1 2018 % change
Revenue 503 487 -3.0%
Recurring EBITDA (*) 48.4 52.8 9.1%
% of revenue 9.6% 10.8%
Recurring EBIT (*) 35.8 40.2 12.2%
% of revenue 7.1% 8.2%

(*) before restructuring and non-recurring items

Agfa Specialty Products – year to date

in million Euro H1 2017 H1 2018 % change
Revenue 98 101 2.7%
Recurring EBITDA (*) 9.6 13.6 41.1%
% of revenue 9.8% 13.4%
Recurring EBIT (*) 8.0 11.6 45.5%
% of revenue 8.2% 11.5%

(*) before restructuring and non-recurring items

End of message

 

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. Dirk De Man, 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.

Contact:

Viviane Dictus
Director Corporate Communication
Septestraat 27
2640 Mortsel – Belgium
T +32 (0) 3 444 71 24
E viviane.dictus@agfa.com

Johan Jacobs

Corporate Press Relations Manager
T +32 (0)3/444 80 15

E johan.jacobs@agfa.com

Click here for Agfa’s consolidated statements.

Click here for the Condensed Interim Financial Statements as of June 30, 2018.

2018-08-21T18:54:23+00:00