Agfa-Gevaert publishes its first quarter 2014 results - Regulated information

  • Group revenue impacted by the weakness in the emerging markets and by currency effects
  • Agfa HealthCare’s Direct Radiography and Enterprise IT performed well - Imaging IT was influenced by the uncertain investment climate in the US healthcare market
  • Gross profit margin increased year-on-year, in spite of the impact of the strike
  • Net result improved year-on-year to 1 million Euro
  • Net debt decreased from 217 million Euro at the end of 2013 to 191 million Euro due to the strong cash flow generation

  • Press Release
  • Mortsel - Belgium
  • May 13, 2014 7:45 AM CET

Agfa-Gevaert today announced its first quarter 2014 results.

Currency effects and the weakness in most of the emerging markets had a strong negative impact on our first quarter revenue, in particular for our traditional businesses which are more exposed to these markets. Despite the negative effects of the strike at our Belgian manufacturing sites, we succeeded in improving our gross profit margin. Benefiting from our efficiency programs and our previously announced restructuring efforts, we achieved a positive net result. Being a major focus point, cash flow generation was strong due to our working capital management program. As a result, we further reduced our net financial debt. We believe the first half of the year 2014 will continue to show a soft business environment, but we will continue to improve our gross profit margin and we will continue to focus on cash flow generation. We stick to our medium term target of delivering a double digit recurring EBITDA percentage,” said Christian Reinaudo, President and CEO of the Agfa-Gevaert Group.

Agfa-Gevaert Group - first quarter 2014

Euro millions Q1 2013 Q1 2014 % change
Revenue 705 622 -11.8%
Gross Profit (*) 203 182 -10.3%
% of revenue 28.8% 29.3%
Recurring EBITDA (*) 41 34 -17.1%
% of revenue 5.8% 5.5%
Recurring EBIT (*) 21 16 -23.8%
% of revenue 3.0% 2.6%
Result from operating activities 12 15 25.0%
Result for the period (12) 1
(*) before restructuring and non-recurring items.

The Agfa-Gevaert Group’s first quarter revenue declined by 11.8 percent to 622 million Euro. Excluding currency-related effects, the decline amounted to 8.8 percent. The top line was also impacted by the rather weak performance in most of the emerging markets and by the product portfolio rationalization in Agfa Graphics. While Agfa HealthCare’s Direct Radiography and Enterprise IT businesses performed well, the Imaging IT activities suffered from the uncertain investment climate in the US healthcare sector.

In spite of the strike, the Group’s gross profit margin improved from 28.8 percent in the first quarter of 2013 to 29.3 percent. The main drivers behind the improvement were the targeted efficiency programs and positive raw material effects.

As a percentage of revenue, Selling and General Administration expenses amounted to 20.6 percent.

R&D expenses were lower than in the first quarter of 2013 as a result of efficiency improvements and product portfolio rationalization actions.

Recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) and recurring EBIT remained almost stable at 5.5 percent and 2.6 percent of revenue respectively.

Restructuring and non-recurring items resulted in an expense of 1 million Euro, versus an expense of 9 million Euro in the first quarter of 2013.

The net finance costs amounted to 14 million Euro, versus 16 million Euro in 2013.

Overall, the tax expense was nil.

The Group posted a net profit of 1 million Euro, versus minus 12 million Euro in the first quarter of 2013.

Financial position and cash flow

  • At the end of the quarter, total assets were 2,559 million Euro, compared to 2,568 million Euro at the end of 2013.

  • Inventories amounted to 544 million Euro (100 days), versus 112 days in the first quarter of 2013. Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 421 million Euro (61 days) and trade payables were 225 million Euro, or 41 days.
  • Net financial debt amounted to 191 million Euro, versus 217 million Euro at the end of 2013.
  • Net cash from operating activities amounted to 31 million Euro.

Agfa Graphics - first quarter 2014

Euro millions Q1 2013 Q1 2014 % change
Revenue 371 327 -11.9%
Recurring EBITDA (*) 13.6 20.4 50.0%
% of revenue 3.7% 6.2%
Recurring EBIT (*) 4.4 12.6 186.4%
(*) before restructuring and non-recurring items.

Agfa Graphics’ revenue decreased by 11.9 percent to 327 million Euro. On a currency comparable basis, the decline amounted to 9.5 percent. The weak performance in most of the emerging markets weighed on the business group’s top line. The revenue evolution also reflects the product portfolio rationalization, in particular for the traditional businesses. In the prepress segment, the digital computer-to-plate (CtP) business continued to suffer from competitive pressure.

The industrial inkjet segment’s top line was influenced by the weak investment climate and the product portfolio rationalization.

In spite of the impact of the strike, Agfa Graphics’ gross profit margin improved from 25.1 percent in the first quarter of 2013 to 27.5 percent. The improvement resulted from the business group’s efficiency programs and positive raw material effects. Furthermore, the business group succeeded in strongly improving its recurring EBITDA and recurring EBIT. Recurring EBITDA reached 20.4 million Euro (6.2 percent of revenue), versus 13.6 million Euro (3.7 percent of revenue) in the first quarter of 2013. Recurring EBIT improved from 4.4 million Euro (1.2 percent of revenue) to 12.6 million Euro (3.9 percent of revenue).

In the first quarter, the Independent Carton Group (ICG), an association of 18 independently owned and operated folding carton manufacturers in the US, announced that Agfa Graphics won its Supplier of the Year Award for 2013.

In the field of prepress, Agfa Graphics released version 2.1 of its Apogee StoreFront solution. Apogee StoreFront is a cloud-based web-to-print solution that enables print service providers to create and manage online stores for offset as well as digital print. Recently, the European Digital Press Association awarded Apogee StoreFront as best web-to-print solution at the FESPA trade show in London. Support for personalized online stores is one of the new features.

Launched in the fourth quarter of 2013, the chemistry-free Azura TU printing plate already convinced several printers of its many advantages. Among the companies embracing this new technology are Tap Grafiche (Italy), Grafiche Baroncini (Italy), Autumn Press (USA), Stephens & George Print Group (UK) and Fast Proof Press (Australia). Agfa Graphics also further increased its installed base for chemistry-free printing plate technology in Japan. New customers include the Harada, Mochizuki and Akao printing companies. Furthermore, the Japanese Beniya Offset company has started full-scale operation of its Azura TS chemistry-free thermal printing plates and Quick Dry Printing technique. Beniya Offset reported a significant reduction in ink and water consumption, as well as huge energy savings.

In newspaper printing, new prepress contracts were signed with - among other companies - the Politika newspaper (Republic of Serbia) and Dong-A Ilbo, which is one of the most important newspapers in Korea.

In the field of inkjet, Agfa Graphics introduced two new members to its family of Jeti Titan wide-format printers. The Jeti Titan S (speed) and HS (high speed) flatbed inkjet printers for indoor and outdoor applications combine exceptional print quality and high productivity at a best-in-industry price point. The robust engines incorporate the latest generation in inkjet print heads. While the Jeti Titan S is equipped with one row of print heads, the Jeti Titan HS has two rows offering even higher productivity.

Agfa HealthCare - first quarter 2014

Euro millions Q1 2013 Q1 2014 % change
Revenue 276 244 -11.6%
Recurring EBITDA (*) 21.4 12.7 -40.7%
% of revenue 7.8% 5.2%
Recurring EBIT (*) 11.6 3.7 -68.1%
(*) before restructuring and non-recurring items.

Impacted by adverse currency effects, Agfa HealthCare’s revenue decreased by 11.6 percent. On a currency comparable basis, the decrease amounted to 7.8 percent. A major part of the film revenue decline of the Imaging segment is attributable to the weak performance in the emerging markets. In the segment’s digital radiography business (consisting of Computed Radiography, Direct Radiography and the hardcopy business), the DR product range continued its strong growth.
In the IT segment, the Enterprise IT business performed well, whereas the Imaging IT business suffered from the continuously uncertain investment climate in the US healthcare market.

Agfa HealthCare’s gross profit margin amounted to 34.4 percent of revenue, versus 35.1 percent in the first quarter of 2013. Profitability was influenced by very strong adverse currency and mix effects and the strike on the one hand, and efficiency improvements and favorable raw material effects on the other hand. Recurring EBITDA amounted to 12.7 million Euro (or 5.2 percent of revenue) and recurring EBIT to 3.7 million Euro (or 1.5 percent of revenue).

One of the most important highlights of the first quarter was the inauguration of Agfa HealthCare’s new offices in the Kingdom of Saudi Arabia on March 16. The new offices will ensure a greater presence for Agfa HealthCare in the key Middle East market.

In the field of digital radiography, Agfa HealthCare launched the new mobile DX-D Retrofit solution at the ECR event in Vienna (Austria). The solution allows care centers an easy and affordable way to migrate to Direct Radiography using their existing X-ray equipment. In Belgium, the pediatric radiology department of University Hospitals Leuven chose to install a mobile DX-D 100 DR solution from Agfa HealthCare to meet the extremely high requirements typical to pediatric en neonatal imaging. Examples of the many digital radiography wins and installations in the US are the installation of two DX-D 600 systems in the Children's National Medical Center - a prestigious pediatric hospital - and the installation of 6 DX-D 100 systems at Ochsner Health System.

In Imaging IT, Agfa HealthCare teamed with Dell to integrate its ICIS (Imaging Clinical Information System) platform with Dell DRIVE Plus to offer medical image management within electronic health records (EHR). At the HIMSS 2014 event, Agfa HealthCare strengthened its leadership position in enterprise imaging in the Americas region by introducing capabilities to the ICIS platform that further enable image transfer between health systems in Accountable Care Organizations (ACO), Health Information Exchanges (HIE) and other multi-facility networks. The company's strategic alliance with Cleveland Clinic's MyPractice Imaging Solutions consulting was highlighted at HIMSS in a conference education session with approximately 150 Chief Information Officers and healthcare executives. In Belgium, the ZNA hospital network (Antwerp) is extending its existing Imaging Clinical Information System (ICIS) beyond radiology to all other image-producing departments. ZNA was the first hospital in Belgium to implement ICIS. All its image archiving and storage is how handled off-site, at Agfa HealthCare’s data center in Mortsel.

Agfa HealthCare also continued to roll-out its new IMPAX Agility medical imaging platform in hospitals around the globe. Introduced in 2013, the solution has gone live or is being installed in over 125 hospitals. The solution is very successful in Brazil and several other Latin American countries.

Furthermore, Agfa HealthCare announced that it signed Imaging IT contracts with a number of Belgian hospitals, including AZ Monica (Deurne), Heilig Hart (Lier), Sint-Maria (Halle), AZ Sint-Blasius (Dendermonde) and the Antwerp University Hospital.

At ECR, Agfa HealthCare announced the European launch of its IMPAX REM (Radiation Exposure Monitoring) solution that supports individual patient’s radiation exposure tracking and collects radiation exposure information to help measure the use of radiation dose in medical imaging overall. In the US, a number of large health systems - including Massachusetts General Hospital (MGH) and University of California - San Francisco (UCSF) - upgraded their IMPAX installations to achieve the most recent capabilities designed for the flagship solution. In the field of cardiology IT, a number of US hospitals integrated the IMPAX Cardiovascular image management solution and the IMPAX HeartStation ECG management solution with their EHRs.

In the field of Enterprise IT, Agfa HealthCare’s solutions continued their success in the German speaking region of Europe. At the beginning of the year, new ORBIS HIS/CIS solutions were taken into operation at several hospitals and care organizations in Germany. Agfa HealthCare also reported that it successfully installed its HYDMedia solution at multiple sites in France, in Canada and in other countries around the globe. HYDMedia is a healthcare content management system that manages all digital and paper documents for hospitals or regional networks.

Agfa Specialty Products - first quarter 2014

Euro millions Q1 2013 Q1 2014 % change
Revenue 58 51 -12.1%
Recurring EBITDA (*) 6.5 1.8

-72.3%

% of revenue 11.2% 3.5%
Recurring EBIT (*) 5.5 0.6 -89.1%
(*) before restructuring and non-recurring items.

Mainly due to the lower silver price, Agfa Specialty Products’ revenue decreased to 51 million Euro. Together with the Printed Circuit Board business, Agfa Specialty Products’ future-oriented businesses (mainly Synaps Synthetic Paper, Orgacon Electronic Materials and Security) performed well.

The business group’s recurring EBITDA declined year-on-year to 1.8 million Euro and recurring EBIT to 0.6 million Euro. Both lines were impacted by the strike.

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. 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 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."

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

Click here pdf (57 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