Agfa-Gevaert reports second quarter results – Regulated information

Press Release / Mortsel - Belgium / 28th July 2009


Agfa-Gevaert today announced its second quarter results.
  • Market trends in line with previous statements: Group sales decreased in line with Q1 trend
  • Recurring EBIT at 38 million Euro versus 37 million Euro in the second quarter of 2008 and 28 million Euro in the first quarter of 2009
  • Operating result (26 million Euro) remained stable versus the second quarter of 2008
  • Decrease of SG&A costs well ahead of previously announced plans
  • Net result at minus 9 million Euro
  • Net financial debt improved considerably versus the first quarter of 2009
  • Agreement with banks about the sale of receivables for an amount of 160 million Euro
Agfa-Gevaert Group – second quarter
Euro millions Q2 2008 Q2 2009 % change
Net Sales 777 677 -12.9%
Gross Profit (*) 253 214 -15.4%
% of sales 32.6% 31.6%
Recurring EBITDA (*) 66 64 -3.0%
% of sales 8.5% 9.5%
Recurring EBIT (*) 37 38 +2.7%
% of sales 4.8% 5.6%
Operating result 26 26 0.0%
Net result 3 (9)

(*) before restructuring and non-recurring items.

 

Compared to the second quarter of 2008, Group sales decreased 12.9 percent to 677 million Euro. In Agfa Graphics and Agfa Specialty Products, the sales trend was in line with the first quarter of 2009, whereas Agfa HealthCare’s sales figures showed the impact of the longer decision processes for investments in IT and equipment.

The sales decrease affected the Group’s manufacturing efficiency due to lower use of capacity. This was partially offset by the positive effects of the lower raw material prices. As a result, the Group’s recurring gross profit margin decreased from 32.6 percent in the second quarter of 2008 to 31.6 percent. However, the decrease versus last year’s quarter is less than in the first quarter of 2009.

Due to its strict cost management, Agfa-Gevaert succeeded in further reducing its Selling and General Administration expenses. The monthly SG&A expense was brought down from 57 million Euro in the second quarter of 2008, to 46 million Euro in the second quarter of 2009, which is a cost decrease by 19.3 percent. The SG&A expenses represented 20.4 percent of sales, versus 22.0 percent in the second quarter of 2008. The Group has taken a number of additional measures to further lower its costs. It will continue to evaluate the market trends in all business groups and take further action if necessary.

The recurring EBIT was affected by a newly imposed pension charge (amounting to 4 million Euro) related to pension insurances in Germany.

The Group’s recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) decreased from 66 million Euro in the second quarter of 2008 to 64 million Euro. Recurring EBIT increased from 37 million Euro to 38 million Euro.

The restructuring and non-recurring items resulted in an expense of 12 million Euro, stable compared to the second quarter of 2008.

As in the first quarter of 2009, the non-operating result was affected by pension provisions (mainly concerning inactives), to cover for increased pension deficits in the USA and the UK. The non-operating result amounted to minus 27 million Euro.

Taxes amounted to 8 million Euro versus 2 million Euro in the second quarter of 2008.

The net result amounted to minus 9 million Euro, compared to 3 million Euro in the second quarter of 2008.

Balance sheet and cash flow

– Next to its long-term funding, the Group improved its mid-term funding options by signing agreements with three core banks about the sale of receivables for an amount of 160 million Euro. This transaction has reduced the Group’s net debt by 40 million Euro in the second quarter. It is one of the levers to further reduce net debt in the future.

– At the end of June 2009, total assets were 2,963 million Euro, compared to 3,160 million Euro at the end of 2008.

– Inventories were 543 million Euro (or 99 days). Trade receivables amounted to 657 million Euro, or 69 days (including deferred revenue and advanced payments) and trade payables were 187 million Euro, or 34 days.

– Net financial debt further improved to 569 million Euro at the end of June 2009, compared to 673 million Euro at the end of 2008, and 737 million Euro at the end of June 2008. In addition to the sale of receivables (40 million Euro), this improvement is due to working capital improvements and the strict cash management control.

– Net operating cash flow amounted to 106 million Euro.

Agfa Graphics – second quarter
Euro millions Q2 2008 Q2 2009 % change
Net Sales 385 326 -15.3%
Recurring EBITDA (*) 26.6 23.9 -10.2%
    % of sales 6.9% 7.3%
Recurring EBIT (*) 13.8 12.2 -11.6%

(*)  before restructuring and non-recurring items.

 

Following the trend of the previous months, Agfa Graphics’ sales were severely hit by the impact of the global economic crisis on the printing industry. The effects of the crisis are the strongest in the field of investment goods, but the slowdown in the advertising markets also resulted in a lower use of consumables, such as graphic film and printing plates. Competitive pressure also increased in recent months, mainly due to – among other reasons – overcapacity. Agfa Graphics’ sales decreased 15.3 percent versus last year’s second quarter.

The volume decline as well as the competitive pressure affected Agfa Graphics’ gross margin. These adverse effects were partially offset by some positive effects of the lower raw material prices. The business group continued its efforts to reduce its Selling and General Administration costs, which decreased by 19 million Euro versus the second quarter of 2008. The recurring EBITDA margin increased to 7.3 percent of sales. The recurring EBIT margin was 3.7 percent of sales, which is a status quo compared to last year’s second quarter, but a significant improvement versus this year’s first quarter.

In prepress, Agfa Graphics added a new solution to its :Avalon N range of platesetters. The :Avalon N4 is fit for midsize commercial printers and ideally suited to work with Agfa Graphics’ :Azura chemistry-free printing plates. Agfa Graphics also introduced a new release of its :Apogee Suite workflow software, which allows printers to shorten their production time and to further simplify their production chain.

In the USA, Agfa Graphics renewed its semi-exclusive contract with the Richmond, VA based buying group IPW. The group represents over 160 companies, most of which are mid-sized commercial printers. Lüscher AG, the Swiss supplier of plate setting equipment, accredited Agfa Graphics’ new :Aluva printing plate range to work on their line of UV platesetters. At the China Print trade fair (Beijing – May 12-16), Agfa Graphics signed a number of important printing plate contracts, as well as deals for platesetters and :Apogee workflow packages.

In industrial inkjet, Agfa Graphics unveiled the second generation of its :M-Press industrial flatbed press at the Fespa Digital 2009 trade fair. The :M-Press Tiger combines a 300 percent increase in productivity with higher quality output. Agfa Graphics’ single pass :Dotrix Modular inkjet press was acclaimed as the ‘Best Industrial (Specialty) Printing Solution of the Year 2009′ by the European Digital Press Association. Furthermore, Agfa Graphics sold its first :Dotrix Modular in the Asian region to Unit Safety Signs in Tokyo (Japan). At the Sign Expo trade fair (Las Vegas, US), numerous :Anapurna systems were sold, stressing the success of Agfa Graphics’ range of large-format inkjet printers.

Agfa HealthCare – second quarter
Euro millions Q2 2008 Q2 2009 % change
Net Sales 313 295 -5.8%
Recurring EBITDA (*) 33.9 42.2 +24.5%
    % of sales 10.8% 14.3%
Recurring EBIT (*) 19.1 28.5 +49.2%

(*) before restructuring and non-recurring items.

 

The business group’s sales decreased by 5.8 percent to 295 million Euro. Mainly in the USA and in certain European countries, the economic crisis is causing delays in the investments of care organizations in Computed Radiography (CR) equipment and Imaging IT. The market for X-ray film evolved in line with expectations. Agfa HealthCare was able to expand its market share for hardcopy film. Sales in this segment were characterized by the continuing market decline in the USA, an accelerating market decline in Western Europe and continued growth in emerging markets. Enterprise IT continued to perform strongly.

Agfa HealthCare succeeded in considerably improving its profitability due to improved service efficiencies and a continued reduction of its SG&A expenses. Recurring EBITDA amounted to 42.2 million Euro (or 14.3 percent of sales). Recurring EBIT improved by 49.2 percent to 28.5 million Euro, or 9.7 percent of sales.

In the field of Imaging Informatics, Agfa HealthCare released its latest version of its PACS (Picture Archiving and Communication System) solution: IMPAX 6.4. This significant new release delivers new features and tools to aid users in managing complex multi-series studies and offers an improved navigation workflow for large CT and MR datasets. It also introduces new workflow features. Furthermore, Agfa HealthCare signed an agreement with Segami Corporation to integrate the Oasis workstation software into IMPAX. The solution permits nuclear medicine physicians to review, process and report studies on their IMPAX workstation.

The second quarter also saw the signing of a number of important IT contracts. The University Hospital of Bonn (Germany) selected IMPAX after a European-wide tender process for a PACS solution to meet the ever evolving needs of its radiology department. In Belgium, the Ziekenhuisnetwerk Antwerpen (Antwerp) will install IMPAX to centralize the diagnostic and clinical imaging needs of its nine sites across the city. Agfa HealthCare will act as the customer’s key Application Service Provider (ASP) for medical imaging, providing remote solution hosting and management at its advanced server facilities in Mortsel. In the USA, the Wichita Clinic in Kansas is deploying Agfa HealthCare’s IMPAX Mobility solution wits its IMPAX Data Center enterprise medical archive. IMPAX Mobility allows referring physicians to access medical data, 2D and 3D images and tools on virtually any device (including PCs, laptops and smartphones) over any type of network connection. Western Maryland Health System selected Agfa HealthCare to provide a state-of-the-art IMPAX cardiovascular imaging and information management system for its new healthcare facility in Cumberland, Maryland.

In Enterprise IT, Agfa HealthCare’s ORBIS solution is gaining momentum in its selected target markets. In France, for example, the Centre Hospitalier du Mans selected ORBIS to support the implementation of a full Electronic Patient Record.

Agfa Specialty Products – second quarter
Euro millions Q2 2008 Q2 2009 % change
Net Sales 79 56 -29.1%
Recurring EBITDA (*) 6.0 4.6 -23.3%
% of sales 7.6% 8.2%
Recurring EBIT (*) 4.7 3.6 -23.4%

(*) before restructuring and non-recurring items.

In line with the first months of the year, Agfa Specialty Products’ sales decreased 29.1 percent compared to the second quarter of 2008. These figures reflect the effects of the economic crisis on some of the business group’s important markets and the continuing market-driven decline for some of the traditional film products. Film for Printed Circuit Boards, Aerial Photography Film and Synaps® synthetic paper performed better than in the first quarter of 2009. Their sales figures also exceed the levels of the second quarter of 2008.

Agfa Specialty Products’ profitability was affected by the sales decline, additionally causing manufacturing inefficiencies due to lower use of capacity. The recurring EBITDA margin amounted to 8.2 percent of sales and the recurring EBIT margin amounted to 6.4 percent of sales.

Half year results
Agfa-Gevaert Group – half year
Euro millions H1 2008 H1 2009 % change
Net Sales 1,530 1,339 -12.5%
Gross Profit 510 422 -17.3%
% of sales 33.3% 31.5%
Recurring EBITDA (*) 137 119 -13.1%
% of sales 9.0% 8.9%
Recurring EBIT (*) 77 66 -14.3%
% of sales 5.0% 4.9%
Operating result 61 63 +3.3%
Net result (consolidated comp.) 13 (18)

(*)  before restructuring and non-recurring items. 

 

Agfa Graphics – half year
Euro millions H1 2008 H1 2009 % change
Net Sales 763 641 -16.0%
Recurring EBITDA (*) 57.3 37.4 -34.7%
    % of sales 7.5% 5.8%
Recurring EBIT (*) 31.0 13.4 -56.8%

(*)  before restructuring and non-recurring items. 

 

Agfa HealthCare – half year
Euro millions H1 2008 H1 2009 % change
Net Sales 607 586 -3.5%
Recurring EBITDA (*) 66.2 81.2 +22.7%
    % of sales 10.9% 13.9%
Recurring EBIT (*) 35.9 54.0 +50.4%

(*)  before restructuring and non-recurring items.

 

Agfa Specialty Products – half year
Euro millions H1 2008 H1 2009 % change
Net Sales 160 112 -30.0%
Recurring EBITDA (*) 14.0 8.1 -42.1%
% of sales 8.8% 7.2%
Recurring EBIT (*) 11.3 6.0 -46.9%

(*) before restructuring and non-recurring items.

Outlook

As announced in the publications concerning the first quarter results, Agfa-Gevaert is inclined to believe that the crisis-driven decline in its most important markets is bottoming out. However, it is still impossible to predict when the markets will pick up and when demand will recover. Meanwhile, Agfa-Gevaert continuously adapts the cost structures of its business groups to the situation in their respective markets in order to safeguard and strengthen their competitive positions.

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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. Jo Cornu, President and CEO, and Mr. Kris Hoornaert, CFO, jointly certify that, to the best of their knowledge, the interim consolidated financial statements included in the interim 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 interim 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.

Agfa believes that the most noteworthy risks facing the company for the coming quarters would be the effects of the continued economic crisis on its key markets.”

Key risk management data is provided in the annual report (p.30) available on www.agfa.com.

Click here for Agfa’s consolidated statements. 


Viviane Dictus
Director Corporate Communication
Tel nr.: +32 (0) 3 444 7124
Fax nr.: +32 (0) 3 444 4485
viviane.dictus@agfa.com


Johan Jacobs
Corporate Press Relations Manager
Tel nr.: +32 (0) 3 444 8015
Fax nr.: +32 (0) 3 444 4485
johan.jacobs@agfa.com

2009-07-28T07:45:00+00:00