Business News

Agfa-Gevaert reports third quarter results – Regulated information

Thursday 25. November 2010 - Group revenue increased by 9 percent; Recurring EBIT improved to 54 million Euro; Positive net result of 16 million Euro; Net debt at 398 million Euro

Agfa-Gevaert today announced its third quarter results.

Agfa-Gevaert Group – third quarter
Euro millions Q3 2009 Q3 2010 % change
Revenue 681 742 9.0%
Gross Profit (*) 220 243 10.5%
% of revenue 32.3% 32.7%
Recurring EBITDA (*) 68 78 14.7%
% of revenue 10.0% 10.5%
Recurring EBIT (*) 43 54 25.6%
% of revenue 6.3% 7.3%
Result from operating activities 36 48 33.3%
Profit attributable to the owners of the Company 4 16
Net cash from operating activities 55 34
(*) before restructuring and non-recurring items.
Continuing the positive trend of the previous quarter, the Group’s revenue grew 9.0 percent versus the third quarter of 2009. Both Agfa Graphics and Agfa HealthCare contributed to the growth. The current exchange rate conditions had a beneficial impact of 6.2 percent on the Group’s top line business performance.
Due to the continuous success of the efficiency improvement programs, the Group’s recurring gross profit margin improved to 32.7 percent, versus 32.3 percent (or 30.6 percent excluding a one-off IP income in Graphics) in the third quarter of 2009. In the third quarter of 2010, the gross profit margin was not influenced by any one-off effects.
As a percentage of revenue, Selling and General Administration expenses slightly decreased to 19.3 percent.
The Group’s recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) increased from 68 million Euro in the third quarter of 2009 to 78 million Euro. Recurring EBIT improved from 43 million Euro (6.3 percent of revenue) to 54 million Euro (7.3 percent of revenue).
Restructuring and non-recurring items resulted in an expense of 6 million Euro, versus an expense of 7 million Euro in 2009.
The net finance costs amounted to 26 million Euro, compared to 23 million Euro in the third quarter of 2009.
Income tax expense amounted to 6 million Euro, compared to 8 million Euro in the third quarter of 2009.
A positive net result of 16 million Euro was booked, compared to 4 million Euro in the third quarter of 2009.
Balance sheet and cash flow
At the end of September 2010, total assets were 3,063 million Euro, compared to 2,852 million Euro at the end of 2009.
Inventories amounted to 627 million Euro (or 119 days). Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 482 million Euro, or 58 days and trade payables were 252 million Euro, or 48 days.
Net financial debt amounted to 398 million Euro, versus 445 million Euro at the end of 2009 and 500 million Euro at the end of the third quarter of 2009.
In the third quarter, net cash from operating activities amounted to 34 million Euro.
Agfa Graphics – third quarter
Euro millions Q3 2009 Q3 2010 % change
Reveneue 344 400 16.3%
Recurring EBITDA (*) 30.1 39.8 32.2%
% of revenue 8.8% 10.0%
Recurring EBIT (*) 19.1 29.0 51.8%
% of revenue 5.6% 7.3%
(*) before restructuring and non-recurring items.
The successful completion of the acquisition of the assets of the Harold M. Pitman Company was announced on August 11. Pitman is a leading US supplier of prepress, industrial inkjet, pressroom and packaging printing products and systems. September 1, Agfa Graphics and Shenzhen Brothers reported the go-live of the Agfa Graphics Asia joint venture, which was announced at the beginning of 2010.
Although last year’s third quarter top line was positively impacted by a 17 million Euro IP income, revenue increased by 16.3 percent (9.3 percent excluding currency effects). The increase was due to both internal growth and the recent strategic moves. The latter’s contribution to the top line amounted to 36 million Euro.
In prepress, both the analogue computer-to-film (CtF) and the digital computer-to-plate (CtP) businesses contributed to the revenue increase. The latter increased its volumes, but continued to face competitive pressure. Driven by volume growth and the effects of the recent strategic moves, the revenue increase is mainly attributable to the USA and the emerging countries. The recovery in most European countries continues to lag behind the rest of the world.
The Industrial Inkjet segment’s revenue continued to increase due to the combined effects of external and internal growth.
Agfa Graphics’ gross profit margin was 29.8 percent, versus 29.9 percent in the third quarter of 2009. Excluding the before-mentioned exceptional IP income, the third quarter 2009 margin was 26.3 percent. The improvement was due to the increased volumes, the effect of the efficiency programs and the favourable raw materials impact. Recurring EBITDA amounted to 39.8 million Euro (10.0 percent of revenue). Recurring EBIT was 29.0 million Euro (7.3 percent of revenue).
In the third quarter, Agfa Graphics received a Ringier Technology Innovation Award for its high-end :Dotrix industrial inkjet press. With its awards, the Chinese Ringier Trade Media Ltd recognizes companies that have made significant contributions to the advancement of their specific industry.
The installed base for the high-end industrial flatbed press :M-Press Tiger continues to grow. Recently, new contracts were signed with – for example – the Graphic Tech printing company (USA) and Active Display Group (Australia).
In Latin America, the introduction of the new :Jeti 1224 UV HDC wide-format printer was a success, with orders in several countries.
In prepress, a number of important contracts were signed in the third quarter. For instance, US media organization Times-Shamrock signed a multi-site agreement for Agfa Graphics’ :Advantage N-SL platesetters and :N91V printing plates. Times-Shamrock owns 42 small to mid-sized print properties.
Recently, Agfa Graphics announced the launch of the new :Advantage N XXT system, the fastest of the :Advantage N family of platesetters.
The beginning of October was marked by several successful trade shows. At Graph Expo (Chicago, USA), Agfa Graphics and Pitman teamed up for the first time to demonstrate their one-stop shop strategy in industrial inkjet, prepress and packaging. At SGIA (Las Vegas, USA), several new industrial inkjet systems debuted, including the :Anapurna 2050 wide-format printer and the :Jeti 3020 Titan high-speed flatbed system. Several systems were sold at the show, ranging from entry-level printers to high-end solutions.
Agfa HealthCare – third quarter
Euro millions Q3 2009 Q3 2010 % change
Revenue 275 290 5.5%
Recurring EBITDA (*) 35.4 39.7 12.1%
% of revenue 12.9% 13.7%
Recurring EBIT (*) 22.7 27.7 %22.0
% of revenue 8.3% 9.6%
(*) before restructuring and non-recurring items.
Confirming the positive trend of the previous quarter, Agfa HealthCare’s revenue increased 5.5 percent (excluding currency effects: -0.6 percent) compared to the third quarter of 2009. The growth was mainly contributable to the strong performances of both Imaging IT and Enterprise IT.
IT revenue continued its positive trend in the Northern European markets, whereas business in the Southern European countries still suffered from the unstable economic climate. In the emerging countries, Imaging IT continued to perform strongly.
The business group’s gross profit margin improved from 38.9 percent in the third quarter of 2009 to 39.7 percent. The improved service efficiency in IT was partially offset by unfavourable raw material conditions. Agfa HealthCare’s recurring EBITDA amounted to 39.7 million Euro (or 13.7 percent of revenue). Recurring EBIT improved to 27.7 million Euro, or 9.6 percent of revenue, versus 8.3 percent in the third quarter of 2009.
In the field of healthcare IT (including Imaging Informatics and Enterprise IT), Agfa HealthCare signed over 150 agreements with new customers during the first three quarters of the year. These customers include a wide range of healthcare providers, from large multi-site facilities and regional care providers, to medium sized facilities and imaging centers, spanning a global geographical coverage.
Also in IT, Agfa HealthCare announced technology innovations in the fields of Radiology with its IMPAX Data Center solutions, in Cardiology with its IMPAX Cardiology & Heartstation solutions and in the field of Nursing with its ORBIS Care solutions.
In the field of Imaging, Agfa HealthCare announced that it further expanded the geographic availability of the new members of its DX-D offering of direct radiography solutions. Both the DX-D 300 and the DX-D 500n system – now also available in the USA – support a wide range of radiographic exams, while ensuring optimal radiation dose and superb image quality.
Agfa Specialty Products – third quarter
Euro millions Q3 2009 Q3 2010 % change
Revenue 62 52 -16.1%
Recurring EBITDA (*) 4.8 (0.2)
-104.2%
% of revenue 7.7% (0.4)%
Recurring EBIT (*) 3.7 (1.2) -132.4%
% of revenue 6.0% (2.3)%
(*) before restructuring and non-recurring items.
Agfa Specialty Products’ revenue decreased by 10 million Euro, which is mainly due to the shift of part of its film business to Agfa Graphics. The revenue for Printed Circuit Board (PCB) film continued to increase due to the growth of the electronics industry in Asia.
The recurring EBITDA amounted to minus 0.2 million Euro and the recurring EBIT to minus 1.2 million Euro. The business group’s continuous efforts to reduce operational costs only partially counterbalanced the impact of a specific bad debt write-down and the raw material prices.
In the third quarter, Agfa Specialty Products added two self adhesive versions to its innovative portfolio of Synaps synthetic papers. Synaps AP is ideal for permanent marking/labeling. The removable Synaps AR is suitable for the production of promotional displays that can be adhered to windows and other smooth surfaces.
Results after nine months
Agfa-Gevaert Group – year to date
Euro millions 9m 2009 9m 2010 % change
Revenue 2,020 2,142 6.0%
Gross Profit (*) 642 737 14.8%
% of revenue 31.8% 34.4%
Recurring EBITDA (*) 187 262 40.1%
% of revenue 9.3% 12.2%
Recurring EBIT (*) 109 191 75.2%
% of revenue 5.4% 8.9%
Results from operating activities 99 168 69.7%
Profit attributable to the owners of the Company (14) 73
Net cash from operating activities 187 119
(*) before restructuring and non-recurring items.
Agfa Graphics – year to date
Euro millions 9m 2009 9m 2010 % change
Revenue 985 1,136 15.3%
Recurring EBITDA (*) 67.5 131.5 94.8%
% of revenue 6.9% 11.6%
Recurring EBIT (*) 32.5 99.7 206.8%
% of revenue 3.3% 8.8%
(*) before restructuring and non-recurring items.

Agfa HealthCare – year to date
Euro millions 9m 2009 9m 2010 % change
Revenue 861 863 0.2%
Recurring EBITDA (*) 116.6 127.6 9.4%
% of revenue 13.5% 14.8%
Recurring EBIT (*) 76.7 90.9 18.5%
% of revenue 8.9% 10.5%
(*) before restructuring and non-recurring items.
Agfa Specialty Products – year to date
Euro millions 9m 2009 9m 2010 % change
Revenue 174 143 -17.8%
Recurring EBITDA (*) 12.9 7.5 -41.9%
% of revenue 7.4% 5.2%
Recurring EBIT (*) 9.7 4.7 -51.5%
% of revenue 5.6% 3.3%
(*) before restructuring and non-recurring items.
Outlook
In spite of the increase of the raw material prices, the Agfa-Gevaert Group maintains the 2010 outlook given in the half year 2010 press release, published on August 25, 2010.
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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 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 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.”