Business News

Agfa-Gevaert publishes its full year 2012 results

Wednesday 06. March 2013 - Full year revenue growth for both Agfa Graphics and Agfa HealthCare

Quarter-on-quarter and year-on-year gross profit margin improvement
Recurring EBIT increased to 139 million Euro Significant net result improvement
Agfa-Gevaert today announced its full year and fourth quarter 2012 results.
“In spite of the difficult economic environment, our 2012 performance is well in line with expectations. We succeeded in growing our top line and – more importantly – we reversed the previously negative gross margin trend in spite of the considerable negative effect of raw material prices. Our efficiency improvement program delivered its first significant results, helping the company to achieve a positive net result in the fourth quarter of 2012 for the first time since the second quarter of 2011. I am convinced that Agfa is now on a better track and I reiterate the company’s target of delivering a double digit recurring EBITDA percentage in the medium term. In 2013, we will continue to focus our efforts on keeping our SG&A costs under control; improving our gross margin; and growing the top line of Agfa Graphics’ inkjet business and Agfa HealthCare’s digital radiography and IT businesses,” said Christian Reinaudo, President and CEO of the Agfa-Gevaert Group.
Supported by the relative weakness of the Euro versus most other currencies in 2012, the Agfa-Gevaert Group’s full year revenue increased by 2.2 percent to 3,091 million Euro. Both the Agfa Graphics and the Agfa HealthCare business groups contributed to the growth. In the emerging markets, the Group achieved strong revenue growth: double digit growth for Agfa HealthCare and strong single digit growth for Agfa Graphics.
In spite of the considerable negative raw material effects, the gross profit margin improved throughout the year. This evolution was driven by efficiency improvements, volume increases and price effects.
As a percentage of revenue, Selling and General Administration expenses improved from 19.0 percent to 18.5 percent, reflecting the Group’s continuous focus on cost reduction.
The Group’s recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) increased from 218 million Euro to 225 million Euro. Recurring EBIT grew from 129 million Euro to 139 million Euro: the downward trend was reversed in the second half of the year, resulting in excellent growth rates in the third and fourth quarter.
Restructuring and non-recurring items resulted in an expense of 43 million Euro, versus an expense of 93 million Euro in 2011.
The net finance costs amounted to 107 million Euro, versus 84 million Euro in 2011. This increase is mainly explained by the increase in pension costs due to the lower discount rates.
Tax expenses amounted to 20 million Euro.
Reflecting the positive evolution in the course of the year, the result for the period improved from minus 71 million Euro to minus 31 million Euro. The result attributable to the owners of the Company improved from minus 73 million Euro in 2011 to minus 41 million Euro.
Financial position and cash flow
– At the end of the year, total assets were 2,830 million Euro, compared to 2,949 million Euro at the end of 2011.
– Inventories amounted to 635 million Euro (or 103 days). Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 498 million Euro (or 55 days) and trade payables were 278 million Euro, or 45 days.
– Net financial debt amounted to 291 million Euro, versus 267 million Euro at the end of 2011 and 295 million Euro at the end of the third quarter of 2012.
– Net cash from operating activities amounted to 32 million Euro.
Agfa Graphics – full year 2012
Supported by the relative weakness of the Euro, Agfa Graphics’ revenue increased from 1,596 million Euro in 2011 to 1,652 million Euro. The business group’s industrial inkjet segment posted double-digit revenue growth. Excluding currency effects, the segment’s revenue growth was in the high single digits. Whereas industrial inkjet performed according to plan in the first nine months of 2012, the impact of the weak European economy was particularly strong in the fourth quarter.
In the prepress segment, the volume increase was counterbalanced by price pressure. The digital computer-to-plate (CtP) business continued to suffer from the economic conditions in Europe, but its revenue increased in the rest of the world in general and the growth markets in particular. While there was a normalization of film volumes throughout the year, sales in the analog computer-to-film (CtF) business were up versus 2011.
Gross profit totaled 24.7 percent of revenue. The operational improvements were offset by competitive pressure and adverse raw material effects. Recurring EBITDA amounted to 91.0 million Euro (5.5 percent of revenue) and recurring EBIT to 53.1 million Euro (3.2 percent of revenue).
Agfa HealthCare – full year 2012
Agfa HealthCare was able to achieve year-on-year revenue growth in 2012. The revenue increase by 3.0 percent to 1,212 million Euro reflects the performance of the growth initiatives on the one hand, and the effect of the relative weakness of the Euro on the other hand.
In spite of the adverse economic conditions, the IT segment continued to grow. The revenue increase in this segment is mainly attributable to the Enterprise IT business, whereas the Imaging IT business’ revenue remained rather stable. IT performed strongly in Latin America and Europe, with the exception of the South of Europe, where the business suffered from the recession. In North America, the addressable market was rather soft.
In the Imaging segment, Agfa HealthCare continued to be one of the driving forces behind the evolution to digital radiography. In 2012, the digital radiography business (consisting of Computed Radiography, Direct Radiography and the hardcopy business) posted revenue growth: following a rather soft start of the year, the business picked up in the second half of 2012.
Due to the film price increases and Agfa HealthCare’s efficiency improvement program, the gross profit margin improved from 34.8 percent in 2011 to 35.7 percent. Recurring EBITDA reached 133.4 million Euro (or 11.0 percent of revenue). Recurring EBIT improved strongly to 90.6 million Euro (or 7.5 percent of revenue).
Agfa Specialty Products – full year 2012
Agfa Specialty Products’ revenue decreased by 9.2 percent. The printed circuit board film business’ revenue grew slightly in spite of the adverse economic conditions. Mainly in the first nine months of the year, the Orgacon Electronic Materials business suffered from the slowdown in the electronics industry. Sales for the Synaps Synthetic Paper products grew steadily.
Recurring EBIT was almost break even at minus 0.3 million Euro and recurring EBITDA was positive at 5.2 million Euro.
Fourth quarter results
Agfa-Gevaert Group – fourth quarter 2012
The Agfa-Gevaert Group’s revenue increased by almost 1 percent versus the fourth quarter of 2011. In the emerging markets, the Group achieved double digit revenue growth.
Thanks to efficiency improvements, the Group’s gross profit margin increased versus the fourth quarter of 2011 as well as versus the third quarter of 2012.
As a result of the ongoing focus on costs, Selling and General Administration expenses decreased by one percent to 17.5 percent of revenue.
The Group’s recurring EBITDA increased from 64 million Euro in the fourth quarter of 2011 to 79 million Euro. Recurring EBIT grew by 32.6 percent to 57 million Euro. Restructuring charges and non-recurrent items resulted in an expense of 20 million Euro.
For the first time since the second quarter of 2011, the Group achieved a profit for the period, which amounted to 4 million Euro. The result attributable to the owners of the company reached 0 million Euro, versus minus 43 million Euro in the fourth quarter of 2011.
Agfa Graphics – fourth quarter 2012
Agfa Graphics’ fourth quarter revenue increased by 0.7 percent to 421 million Euro. The revenue for analog CtF prepress remained stable due to the normalization of the film volumes. Digital CtP prepress volumes increased slightly versus the fourth quarter of 2011. For the Industrial Inkjet segment, the impact of the adverse economic conditions was stronger than in the earlier quarters of the year. Therefore, the segment was unable to show the same growth rates as in the first nine months of the year.
With particularly strong growth in Latin America, Agfa Graphics performed well in the emerging markets. On the other hand, business was slow in the mature markets in general and in the South of Europe in particular.
Agfa Graphics achieved year-on-year gross profit margin improvement for the third quarter in a row. In the fourth quarter, the gross profit margin reached 23.8 percent versus 23.2 percent in the fourth quarter of 2011. The recurring EBITDA margin amounted to 6.6 percent and the recurring EBIT margin to 4.3 percent.
In the fourth quarter, Agfa Graphics’ innovative prepress and inkjet portfolio attracted a lot of visitor attention at various important trade shows around the globe, including World Publishing Expo and Viscom (both held in Frankfurt, Germany), Graph Expo (Chicago, USA) and SGIA (Las Vegas, USA).
In prepress, Agfa Graphics launched a new addition to its family of :Energy printing plates for commercial and packaging printers at Graph Expo. :Energy Xtra is a highly durable printing plate that offers up to 600.000 impressions without being baked. Also at Graph Expo, Agfa Graphics’ next-generation :Apogee Suite 8.0 prepress workflow solution made its North American debut. :Apogee Suite 8.0 features a set of new tools designed to help offset and digital printers optimize their production processes.
Furthermore, Agfa Graphics again succeeded in extending its prepress customer base. In France, the L’Artésienne printing company (Liévin) ordered an :Avalon platesetter and signed a 4-year contract for :Amigo printing plates. The Norwegian Bodoni company (Bergen) agreed to install an extensive :Apogee workflow solution. In the Oceania region, several print houses switched to Agfa Graphics’ :Energy Elite printing plates. Among the new customers are the supplier of labels and folding cartons Abaris, commercial printer Southern Colour and trade printer CMYKhub. In Brazil, the Jornal Cidade de Rio Claro (Rio Claro, São Paulo) ordered its second :Advantage NSL platesetter. In the US, Agfa Graphics’ chemistry-free :Azura TS printing plates continued to convince printers of their environmental and efficiency advantages. Among the new customers are the leading print supplier Color on Demand (Los Angeles, California) and Capital Printing (Austin, Texas). The :Azura printing plates also continued their success in the Japanese market. Two of the major printing companies switching to Agfa Graphics’ chemistry-free plate technology were Kyoritsu Aikom and Sando Sanyo.
In the field of industrial inkjet, Agfa Graphics signed a number of contracts for its high-end :M-Press flatbed presses. In the USA, Imagine Print Solutions chose the :M-Press Tiger and the Chicago based Tukaiz company purchased the country’s first :M-Press Leopard with Autoloader system.
Furthermore, the customer base for the high-production :Jeti Titan inkjet printers also continued to grow. Superior Graphics (USA) added the :Jeti Titan UV printer to their equipment list. Similar systems were ordered by – among others – ReklameTryk (Denmark), Graphic Application (France), and PVP (France). In the market segment of entry-level wide-format printers, the :Anapurna range continued its global success. Over 1,200 :Anapurna systems are now in operation all over the world.
Agfa HealthCare – fourth quarter 2012
Agfa HealthCare’s revenue increased by 1.2 percent to 337 million Euro. In the Imaging segment, the digital radiography business continued to grow. The IT business’ revenue was lower than in the exceptionally strong fourth quarter of 2011.
In the fourth quarter, Agfa HealthCare achieved strong double-digit revenue growth in the emerging markets, whereas business in the mature markets suffered from the adverse economic conditions.
The gross profit margin improved versus the fourth quarter of 2011, as well as versus the third quarter of 2012, reaching 35.6 percent of revenue. Showing a clear improvement compared to the fourth quarter of 2011 as well as the previous quarters of 2012, the business group achieved a recurring EBITDA margin of 14.7 percent of revenue and a recurring EBIT margin of 11.5 percent of revenue.
An important fourth quarter highlight was the signing of an agreement with Gulf Medical. The company will act as a distributor for the entire Agfa HealthCare portfolio in Saudi Arabia.
In the field of Imaging, Agfa HealthCare has won a Uzbekistan Ministry of Health tender for the delivery of 115 CR 30-X computed radiography systems with DRYSTAR 5300 hardcopy printers. Financed by the World Bank, the project offers Agfa HealthCare the opportunity to support the evolution of healthcare in the country.
Furthermore, Agfa HealthCare was awarded a new direct radiography (DR) contract by the US HealthTrust Purchasing Group. The agreement gives HealthTrust’s nearly 1,400 acute care facilities access to Agfa HealthCare’s entire DR portfolio. Also in the US, Bethesda East Hospital (Boynton Beach, Florida) ordered multiple DX-D 100 mobile DR systems. The motorized DX-D 100 solution can be used throughout the hospital at patients’ bedsides.
In Imaging IT, Agfa HealthCare installed its new IMPAX Agility imaging platform at a number of pilot sites. IMPAX Agility provides PACS (Picture Archiving and Communication System) services, reporting, advanced imaging processing and integration of clinical information in one sophisticated and easy-to-use platform. It is the ideal solution for smaller hospitals, as well as care organizations in emerging markets planning to digitize their image management workflow.
At the RSNA event (Chicago), Agfa HealthCare introduced its Imaging Clinical Information System (ICIS) to the North American healthcare community. Making image-enabled Electronic Patient Records (EPR) a reality, the solution takes enterprise-wide and regional health information exchange to a next level. ICIS allows clinicians to capture, store, exchange and access imaging information securely and independent of location, on a variety of web-enabled devices.
A new version of the IMPAX PACS for Nuclear Medicine was introduced at the 2012 Congress of the European Association of Nuclear Medicine in Milan. The system fully integrates the department’s workflow, bringing together images and data from a wide range of modalities and departments into one IT platform. In the UK, the University Hospitals Birmingham NHS Foundation Trust signed a 5-year contract for the replacement of its current PACS solutions with a comprehensive Agfa HealthCare IMPAX solution. The Dutch Máxima Medisch Centrum ordered an IMPAX solution covering radiology, cardiology and nuclear medicine. The organization has two sites, in Veldhoven and Eindhoven.
In the field of Enterprise IT, the installed base for the HYDMedia archiving solution continued to grow. Among the leading care organizations that recently started to use the solution are the University Hospital of Cologne (Germany), the Children’s Hospital Auf der Bult in Hannover (Germany) and the University Hospital of Basel (Switzerland).
Agfa Specialty Products – fourth quarter 2012
Contrary to the previous quarters, Agfa Specialty Products’ fourth quarter revenue remained stable, with good performances of the Orgacon Electronic Materials business, the Synaps Synthetic Paper business as well as certain classic film businesses.
The business group’s gross profit margin improved versus the fourth quarter of 2011, as well as versus the third quarter of 2012. Recurring EBIT improved to 1.2 million Euro and recurring EBITDA to 2.7 million Euro.
January 2013, Agfa Specialty Products announced the signing of a long-term exclusive supply agreement for microfilm with Eastman Park Micrographics (EPM). Under the agreement, Agfa will manufacture microfilm and related photochemicals for EPM, and EPM will distribute these products worldwide under its own brand name.
Outlook
Given the rather unpredictable economic environment, it is difficult to provide precise guidance. The Agfa-Gevaert Group expects its various growth initiatives to continue to grow. The Group will continue to take all necessary actions to further improve the gross profit margin throughout 2013. Furthermore, 2013 will see additional steps towards the realization of the target of achieving a double digit recurring EBITDA percentage for the Group in the medium to long term.