Agfa-Gevaert publishes its third quarter results - Regulated information

  • Moderate growth of group revenue excluding currency effects
  • Recurring EBIT at 10 million Euro
  • Net result at minus 37 million Euro

  • Press Release
  • Mortsel - Belgium
  • November 16, 2011 07:45

Agfa-Gevaert Group - third quarter 2011

Euro millionsQ3 2010Q3 2011% change
Revenue742719-3.1%
Gross Profit (*)243181-25.5%
% of revenue32.7%25.2%
Recurring EBITDA (*)7832-59.0%
% of revenue10.5%4.4%
Recurring EBIT (*)5410-81.5%
% of revenue7.3%1.4%
Result from operating activities48(9)
Profit attributable to the owners of the Company 16(37)
(*) before restructuring and non-recurring items.

Excluding currency effects, the Agfa-Gevaert Group's revenue grew 1.1 percent compared to last year's third quarter. This growth was driven by Agfa Graphics' industrial inkjet; Agfa HealthCare's Computed Radiography and Direct Radiography; and Specialty Products' film for new applications. It was, however, partially counterbalanced by the decline in the traditional film businesses and by the effects of the weak economic climate.

As expected, the situation on the raw material markets had a very strong impact on the Group's profitability. The effect of the continuous film price increases was counterbalanced by product mix changes, volume effects and related manufacturing inefficiencies. The Group's recurring gross profit margin declined from 32.7 percent in the third quarter of 2010 to 25.2 percent.

As a pecentage of revenue, Selling and General Administration expenses dereased to 18.5 percent, versus 19.3 percent in the previous year.

The Group's recurring EBITDA (th sum of Graphics, HealthCare, pecialty Product and the unallocated portion) decreased from 78 million Euro to 32 million Euro. Recurring EBIT decrased from 54 million Euro to 10 million Euro.

Restructuring and non-recurring items resulted in an expense of 19 million Euro, versus an expense of 6 million Euro in 2010.

The net finance costs amounted to 22 million Euro, versus 26 million Euro in the third quarter of 2010.

Income tax expense remained stable at 6 million Euro.

A net loss of 37 million Euro was booked, compared to a net profit of 16 million Euro in the third quarter of 2010.

"As expected, the traditional seasonal weakness was combined with the impact of the weakening economy and the effect of the raw material prices, which were at the highest levels of the year. Our higher than average restructuring costs show that we are doing everything within our power to align our costs to the situation in our markets and to improve our productivity," said Christian Reinaudo, President and Chief Executive Officer of the Agfa-Gevaert Group.

Balance sheet and cash flow

  • At the end of September 2011, total assets were 2,973 million Euro, compared to 3,086 million Euro at the end of 2010.

  • Inventories amounted to 719 million Euro (or 121 days). Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 476 million Euro, or 60 days and trade payables were 260 million Euro, or 44 days.

  • Reflecting the seasonal pattern and the effect of the WPD acquisition, the net financial debt came in at 339 million Euro, versus 398 million Euro at the end of the third quarter of 2010 and 161 million Euro at the end of 2010.

  • Net cash from operating activities amounted to 2 million Euro.

Agfa Graphics - third quarter 2011

Euro millionsQ3 2010Q3 2011% change
Reveneue400387-3.3%
Recurring EBITDA (*)39.813.5-66.1%
% of revenue10.0%3.5%
Recurring EBIT (*)29.03.8-86.9%
(*) before restructuring and non-recurring items.

As the graphic industry is sensitive to economic fluctuations, Agfa Graphics started to feel the effects of the uncertain economic climate. The business group's third quarter revenue decreased by 3.3 percent to 387 million Euro. Excluding currency effects, an increase of 1.6 percent would have been posted.
The prepress segment continues to be marked by the volume decline in analogue computer-to-film (CtF). This market-driven decline is accelerated by film price increases in reaction to the high raw material prices. Volumes in the digital computer-to-plate (CtP) business continued to increase. The industrial inkjet segment posted another quarter of growth.

Regionally, volumes in North America increased due to the full quarter effect of the Pitman acquisition. Eastern and Northern Europe performed well, whereas business in the South of Europe suffered from the uncertain economic conditions. In Asia, revenue declined in analogue computer-to-film prepress due to the film price increases.

Despite the ongoing film price increases, the gross profit margin decreased to 23.3 percent (29.8 percent in the third quarter of 2010) due to the high raw material prices and the competitive pressure in CtP. Furthermore, the decline of the film volumes affected manufacturing efficiency. Recurring EBITDA amounted to 13.5 million Euro (3.5 percent of revenue). Recurring EBIT was 3.8 million Euro or 1.0 percent of revenue.

In the third quarter, Agfa Graphics and Spandex signed an agreement under which Spandex will distribute Agfa Graphics' range of :Anapurna wide-format industrial inkjet printers in Europe. Spandex is one of the world's leading trade suppliers to the sign making and display industries. Also in inkjet, a new flatbed engine was added to the range of wide-format printers. The versatile and highly productive :Anapurna M2540 FB is ideally suited to print on rigid substrates, including glass, ceramics and wood.

In prepress, Agfa Graphics introduced two additions to its range of eco-friendly chemistry-free printing plates. :N94-VCF is Agfa Graphics' next-generation chemistry-free violet printing plate for newspapers and coldset printers. With :Azura Vi, Agfa Graphics launched its first violet chemistry-free printing plate for commercial printers. These launches reaffirm Agfa Graphics' position as the undisputed technology and market leader in chemistry-free printing plates for thermal and violet prepress systems.
A good illustration of this market leadership is a remarkable milestone that was reached in the Japanese market. King Printers (Osaka) recently became the 300th Japanese user of Agfa Graphics' thermal chemistry-free :Azura TS printing plate.
At the GraphExpo trade show (Chicago - 11 to 14 September), Agfa Graphics also launched the :Energy Elite Pro thermal printing plate for longer print runs, as well as a new version of its workflow management suite for commercial printers. :Apogee Prepress v7.1 offers users significant integration and automation improvements.

Agfa HealthCare - third quarter 2011

Euro millionsQ3 2010Q3 2011% change
Revenue290267-7.9%
Recurring EBITDA (*)39.717.0-57.2%
% of revenue13.7%6.4%
Recurring EBIT (*)27.76.1-78.0%
(*) before restructuring and non-recurring items.

Excluding currency effects, Agfa HealthCare's third quarter revenue decreased 4.6 percent. In the Imaging segment, the growth for Computed Radiography (CR) and Direct Radiography (DR) was counterbalanced by the decline for traditional X-ray film products. The Imaging IT segment was influenced by the uncertain economic conditions, as certain governments scaled down their healthcare budgets and hospitals are postponing their planned investments. The Enterprise IT business' revenue remained stable.

Brazil posted significant growth in digital applications, whereas business in North America was soft. Northern Europe performed well. Business in the South of Europe suffered from the economic slowdown.

Despite the ongoing film price increases, the gross profit margin decreased to 32.2 percent, versus 39.7 percent in the third quarter of 2010. Agfa HealthCare's profitability was influenced by the high silver price, product mix changes and the production inefficiencies resulting from the reduced use of the Group's film production capacity. The business group's recurring EBITDA amounted to 17.0 million Euro (or 6.4 percent of revenue). Recurring EBIT amounted to 6.1 million Euro, or 2.3 percent of revenue.

In September, Agfa HealthCare announced the acquisition of WPD, one of the leading healthcare IT companies in Brazil. Through this acquisition, Agfa HealthCare enters the Hospital Information Systems market in Brazil, where it already has a strong position with its imaging and imaging IT solutions.

In the field of Imaging IT, Agfa HealthCare and Barco launched a new joint program to refresh the diagnostic display systems that are running IMPAX PACS solutions. The program provides customers with access to the latest diagnostic display technology that meets the demands of new trends in imaging IT.
At the 2011 Congress of the European Society of Cardiology in Paris, Agfa HealthCare launched three new cardiology reporting modules. The new modules allow digital reporting for Cardiac CT, Transcatheter Aortic Valve Implantation and Congenital Echocardiography.

In Imaging, the group purchase division of the Premier healthcare alliance awarded Agfa HealthCare a new three-year multi-source contract for its entire line of diagnostic film, dry media and imagers. Premier counts 2,500 member hospitals and 75,000 other healthcare sites in the USA. Early October, Agfa HealthCare announced the signing of a new three-year contract for DR with Novation. The contract offers Novation's more than 30,000 member organizations in the USA access to Agfa HealthCare's broad range of DR systems. Agfa HealthCare also has PACS and CR contracts with Novation.

In the '2011 top 20 Best in KLAS Awards: Medical Equipment and Infrastructure', Agfa HealthCare was again named category leader for single plate CR. Agfa HealthCare's CR 30-X digitizer was the No. 1 ranked CR product for the third consecutive year. KLAS is a research firm specializing in monitoring and reporting the performance of healthcare vendors.

Agfa Specialty Products - third quarter 2011

Euro millionsQ3 2010Q3 2011% change
Revenue526525.0%
Recurring EBITDA (*)(0.2)2.0

% of revenue(0.4)%3.1%
Recurring EBIT (*)(1.2)0.8166.7%
(*) before restructuring and non-recurring items.

Agfa Specialty Products' revenue grew slower than in the previous quarters. The business group started to feel the effects of the uncertain economic climate. As a result, the printed circuit board film business declined versus 2010 for the first quarter this year.

The gross margin was impacted by the high raw material prices and by manufacturing inefficiencies resulting from the reduced use of the film production capacity. In spite of these adverse elements, recurring EBIT increased to 0.8 million Euro and recurring EBITDA to 2.0 million Euro.

Results after nine months

Agfa-Gevaert Group - year to date

Euro millions9m 20109m 2011% change
Revenue2,1422,2183.5%
Gross Profit (*)737628-14.8%
% of revenue34.4%28.3%
Recurring EBITDA (*)262154-41.2%
% of revenue12.2%6.9%
Recurring EBIT (*)19186-55.0%
% of revenue8.9%3.9%
Results from operating activities16848-71.4%
Profit attributable to the owners of the Company73(30)
(*) before restructuring and non-recurring items.

Agfa Graphics - year to date

Euro millions9m 20109m 2011% change
Revenue1,1361,1783.7%
Recurring EBITDA (*)131.565.6-50.1%
% of revenue11.6%5.6%
Recurring EBIT (*)99.735.6-64.3%
(*) before restructuring and non-recurring items.

Agfa HealthCare - year to date

Euro millions9m 20109m 2011% change
Revenue863844-2.2%
Recurring EBITDA (*)127.681.2-36.4%
% of revenue14.8%9.6%
Recurring EBIT (*)90.947.0-48.3%
(*) before restructuring and non-recurring items.

Agfa Specialty Products - year to date

Euro millions9m 20109m 2011% change
Revenue14319637.1%
Recurring EBITDA (*)7.59.729.3%
% of revenue5.2%4.9%
Recurring EBIT (*)4.76.231.9%
(*) 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 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."

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.
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 pdf  (67 KB) for Agfa's consolidated statements.



Viviane Dictus
Director Corporate Communication
Septestraat 27
2640 Mortsel - Belgium
tel+32 (0) 3 444 7124
fax+32 (0) 3 444 4485
viviane.dictus@agfa.com

Johan Jacobs
Corporate Press Relations Manager
Septestraat 27
2640 Mortsel - Belgium
tel+32 (0) 3 444 8015
fax+32 (0) 3 444 4485
johan.jacobs@agfa.com