Business News

Agfa-Gevaert publishes its second quarter results – Regulated information

Wednesday 22. August 2012 - Strong performance of industrial inkjet and healthcare IT

Gross profit margin improvement despite the still negative raw material impact
Recurring EBIT at 32 million Euro
Net result at minus 5 million Euro
Agfa-Gevaert today announced its second quarter results.
Agfa-Gevaert Group – second quarter 2012
Euro millions Q2 2011 Q2 2012 % change
Revenue 763 779 +2.1%
Gross Profit (*) 216 226 +4.6%
% of revenue 28.3% 29.0%
Recurring EBITDA (*) 59 53 -10.2%
% of revenue 7.7% 6.8%
Recurring EBIT (*) 36 32 -11.1%
% of revenue 4.7% 4.1%
Result from operating activities 25 21 -16.0%
Result attributable to owners of the Company 2 (7)
Net cash from (used in) operating activities (99) (13)

(*) before restructuring and non-recurring items.
Supported by positive currency effects, the Agfa-Gevaert Group’s revenue increased by 2.1 percent versus last years second quarter. On the one hand, the Group’s main growth engines (industrial inkjet in Agfa Graphics and IT in Agfa HealthCare) posted strong revenue growth. On the other hand, the situation on the traditional film markets continues to normalize.
Thanks to the Group’s efforts to improve operational efficiency, as well as the price increases for traditional film products, the gross profit margin continued to recover quarter-on-quarter. In spite of the still negative raw material impact, the gross profit margin also improved year-on-year from 28.3 percent in the second quarter of 2011 to 29.0 percent.
As a percentage of revenue, Selling and General Administration expenses decreased slightly to 18.9 percent.
The Group’s recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) decreased from 59 million Euro to 53 million Euro. Recurring EBIT decreased from 36 million Euro to 32 million Euro.
Restructuring and non-recurring items resulted in an expense of 11 million Euro, which is the same level as in the second quarter of 2011.
The net finance costs amounted to 27 million Euro, versus 20 million Euro in 2011.
Income taxes resulted in an income of 1 million Euro, versus an expense of 1 million Euro in 2011.
A result attributable to the owners of the Company of minus 7 million Euro was booked, compared to 2 million Euro in 2011.
“Our second quarter results prove that we continue to deliver on our two key objectives. On the one hand, our industrial inkjet and healthcare IT growth engines are developing according to expectations. On the other hand, our efforts to improve our operational efficiency and our film price increases are paying off. As a result, our gross profit margin improved quarter-on-quarter, as well as year-on-year. We expect this positive trend to continue in the months to come,” said Christian Reinaudo, President and CEO of the Agfa-Gevaert Group.
Financial position and cash flow
At the end of the second quarter, total assets were 3,003 million Euro, compared to 2,949 million Euro at the end of 2011.
Inventories amounted to 711 million Euro (or 116 days). Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 482 million Euro, or 56 days and trade payables were 293 million Euro, or 48 days.
Net financial debt amounted to 306 million Euro, versus 313 million Euro at the end of the second quarter of 2011 and 291 million Euro at the end of the first quarter of 2012.
Net cash from operating activities amouted to minus 13 mllion Euro.
Agfa Graphics – second quarter 2012
Euro millions Q2 2011 Q2 2012 % change
Revenue 405 418 +3.2%
Recurring EBITDA (*) 24.8 21.9 -11.7%
% of revenue 6.1% 5.2%
Recurring EBIT (*) 14.8 12.7 -14.2%
% of revenue 3.7% 3.0%

(*) before restructuring and non-recurring items.
With the industrial inkjet segment performing strongly, Agfa Graphics’ revenue increased by 3.2 percent to 418 million Euro. In prepress, the European computer-to-plate (CtP) business suffered from the weakness of the economy and the sluggishness in the advertising market resulting from it. On the other hand, CtP performed well in the Americas and Aspac, partly because of the weakness of the Euro. In the analog computer-to-film (CtF) business, the evolution of the film volumes continued to normalize.
In continuation of the upward trend observed in the previous quarter and in spite of the still negative impact of the raw material prices, the gross profit margin reached 25.8 percent, which is in line with the second quarter of 2011. The effects of the competitive pressure in CtP prepress and of the high raw material prices were counterbalanced by Agfa Graphics’ film price increases and operational improvements. Recurring EBITDA amounted to 21.9 million Euro (5.2 percent of revenue) and recurring EBIT to 12.7 million Euro or 3.0 percent of revenue.
Without any doubt, the four-yearly international drupa trade fair (Düsseldorf, Germany – May 3-16) was the highlight of the quarter for Agfa Graphics. At the show, inkjet sales accounted for more than 30 percent of the total order intake. In prepress, the many contracts signed for chemistry-free printing plates confirmed Agfa Graphics’ market-leading position in this segment.
In the second quarter, numerous eye-catching contracts were signed, many of them at drupa or resulting from trade show leads.
In prepress, one of the most important contracts was signed with the leading German WAZ newspaper group. WAZ ordered 8 platesetters and 15 clean-out units. The group will also migrate to Agfa Graphics’ chemistry-free :N94 VCF printing plates. In the USA, Southern Graphics Systems signed a major contract for Agfa Graphics’ :Thermostar P970 printing plates. The company provides services and printing plates to its customers in Minnesota and Iowa. In Venezuela, an agreement with Correa del Orinoco – the country’s largest government newspaper – comprises equipment, software as well as printing plates. Dong-A ilbo, the 3rd largest newspaper company in Korea, signed a 5-year printing plate contract for their two production sites.
The wide-format and industrial inkjet portfolio was also very successful during drupa and the weeks following the show. At the show, orders were taken for numerous :Anapurna and :Jeti wide-format printers, as well as several :M-Press high-end inkjet presses. Serilon, the largest distributor of visual communication supplies and equipment in Brazil, closed a deal for no less than 14 :Anapurna systems.
In the second quarter, :M-Press Tiger presses were sold to the French supplier of point-of-purchase advertising Constantin SA and to the US based industry leader in cardboard standups Advanced Graphics. Constantin also ordered a :Jeti Titan 3020 system. Among the new customers for the :M-Press Leopard system are RJ Design (UK), Koma Grafisk (Denmark) and Westcamp Press (USA).
For its :M-Press Leopard press, Agfa Graphics received the EDP Award for ‘Best Wide Format Imaging Printer’. The EDP association groups publishers of leading European magazines devoted to digital printing and associated products.
Agfa HealthCare – second quarter 2012
Euro millions Q2 2011 Q2 2012 % change
Revenue 290 300 +3.4%
Recurring EBITDA (*) 32.4 30.8 -4.9%
% of revenue 11.2% 10.3%
Recurring EBIT (*) 20.8 20.1 -3.4%
% of revenue 7.2% 6.7%

(*) before restructuring and non-recurring items.
Agfa HealthCare’s second quarter revenue increased by 3.4 percent versus the second quarter of 2011. In IT, both the Imaging IT and the Enterprise IT segments reported strong revenue growth. In the Imaging segment, the situation on the traditional X-ray film market started to normalize. The digital radiography business (consisting of Computed Radiography and Direct Radiography) was rather soft. Several countries in the growth regions are extending their accreditation processes for medical devices, which is somewhat delaying the introduction of CR and DR equipment in their healthcare facilities.
IT performed particularly strong in Germany and the North of Europe, as well as in the growth markets. Business in the South of Europe continued to suffer from the recession.
Continuing the positive trend of the past quarters, the gross profit margin reached 36.3 percent of revenue, versus 34,8 percent in the second quarter of 2011. The improvement reflects the diminishing impact of the high raw material prices, as well as Agfa HealthCare’s efforts to support its profitability. Recurring EBITDA amounted to 30.8 million Euro (or 10.3 percent of revenue). Recurring EBIT reached 20.1 million Euro, or 6.7 percent of revenue.
In the field of Imaging, Agfa HealthCare signed a new three-year CR contract with Novation, a leading healthcare supply contracting company in the USA. Through the contract, Agfa HealthCare is able to offer its CR systems to over 65,000 healthcare organizations in the USA. Recently, Agfa HealthCare introduced its DX-D Retrofit system to the market. DX-D Retrofit offers healthcare facilities a cost-effective solution to upgrade their existing film and CR based modalities to DR.
In Imaging IT, Agfa HealthCare formed an alliance with Dell to offer a comprehensive cloud-based image management solution to US care organizations. Dell will host Agfa HealthCare’s cloud clinical archive portfolio, including the newly released Imaging Clinical Information System (ICIS) platform. Through this partnership, Agfa HealthCare can offer its US customers simplified archiving, management and viewing of their medical images, thereby supporting them to image-enable the Electronic Medical Record (EMR). In April, Agfa HealthCare announced that it started to provide off-site hosting of its IMPAX PACS/RIS and long-term image archiving to the Orbis Medical Center in Sittard-Geleen, the Netherlands. The Solution as a Service (SaaS) is provided out of two data centers: one in Aalsmeer, the Netherlands and one at Agfa HealthCare’s headquarters in Mortsel, Belgium. In Ontario, Canada, Agfa HealthCare successfully connected all 37 member sites of Hospital Diagnostic Imaging Repository Services (HDIRS). Agfa HealthCare’s IMPAX Data Center and enterprise viewing technology allows connected physicians to view all diagnostic images and reports within the HDIRS network. In Waterloo (Ontario, Canada), Agfa HealthCare officially opened a new, state-of-the-art R&D facility. The facility will play a key role in the development and worldwide introduction of advanced imaging IT solutions.
In the field of Enterprise IT, Agfa HealthCare launched its HYDMEDIA solution to the Canadian market. HYDMEDIA enables healthcare organizations to integrate all their paper-based and electronic information, creating a complete digital archive of patient records.
Agfa Specialty Products – second quarter 2012
Euro millions Q2 2011 Q2 2012 % change
Revenue 68 61 -10.3%
Recurring EBITDA (*) 3.1 2.3
-25.8%
% of revenue 4.5% 3.8%
Recurring EBIT (*) 1.9 1.0 -47.4%
% of revenue 2.8% 1.6%

(*) before restructuring and non-recurring items.
Agfa Specialty Products’ second quarter revenue decreased by 10.3 percent. The various businesses evolved in line with the trends of the previous quarters.
Recurring EBIT amounted to 1.0 million Euro and recurring EBITDA to 2.3 million Euro.
Results after six months
Agfa-Gevaert Group – year to date

Euro millions H1 2011 H1 2012 % change
Revenue 1,499 1,513 +0.9%
Gross Profit (*) 447 434 -2.9%
% of revenue 29.8% 28.7%
Recurring EBITDA (*) 122 96 -21.3%
% of revenue 8.1% 6.3%
Recurring EBIT (*) 76 53 -30.3%
% of revenue 5.1% 3.5%
Result from operating activities 57 32 -43.9%
Result attributable to owners of the Company 7 (34)
Net cash from (used in) operating activities (125) (20)
(*) before restructuring and non-recurring items.
Agfa Graphics – year to date

Euro millions H1 2011 H1 2012 % change
Revenue 791 814 +2.9%
Recurring EBITDA (*) 52.1 39.3 -24.6%
% of revenue 6.6% 4.8%
Recurring EBIT (*) 31.8 20.1 -36.8%
% of revenue 4.0% 2.5%
(*) before restructuring and non-recurring items.

Agfa HealthCare – year to date

Euro millions H1 2011 H1 2012 % change
Revenue 577 578 +0.2%
Recurring EBITDA (*) 64.2 56.1 -12.6%
% of revenue 11.1% 9.7%
Recurring EBIT (*) 40.9 34.8 -14.9%
% of revenue 7.1% 6.0%
(*) before restructuring and non-recurring items.
Agfa Specialty Products – year to date 2012


Euro millions H1 2011 H1 2012 % change
Revenue 131 121 -7.6%
Recurring EBITDA (*) 7.7 3.2 -58.4%
% of revenue 5.9% 2.6%
Recurring EBIT (*) 5.4 0.6 -88.9%
% of revenue 4.1% 0.5%

(*) before restructuring and non-recurring items.
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 of14 November 2007and 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 of14 November 2007and 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.”