Agfa Reports Lower Revenue for 3Q, Sharp Rise in CTP Market Share
Press release from the issuing company
Economic slow-down and events of 11 September have affected results: sales 6.1 percent lower, EBIT 47 percent lower / 'Horizon' growth and efficiency plan has top priority.
Mortsel, 22 November 2001 - Agfa-Gevaert posted sales of 3,677 million euros in the January - September 2001 period, which is 6.1 percent less than that of the same period in 2000 (3,914 million euros). Agfa's results were clearly affected by the economic slowdown both in the United States and in Europe. The events of 11 September in the United States had a substantial impact on third quarter sales. Group sales for this period amounted to 1,204 million euros, some 7 percent less than that of the third quarter 2000 (1,298 million euros). The Consumer Imaging and Graphic Systems Business Segments suffered the greatest impact from these events, but a reluctance to invest has also been noticeable recently in HealthCare.
The 'New digital solutions' in continuing operations achieved sales of 966 million euros in the first nine months of 2001, a substantial increase of 21 percent over the same period last year. As a result the digital share of group sales is now over 26 percent, against 20.5 percent last year.
Group EBIT (operating result before restructuring and non-recurring results) for the period January - September 2001 amounted to 208 million euros, which is 47 percent less than in the same period of 2000 (393 million euros). This was due mainly to the drop in sales, price erosion and higher production and administration costs. In the third quarter, EBIT of 49 million euros were achieved.
At 26 million euros, profit before taxes for the first nine months of 2001 were 86.5 percent lower than the figure for the same period last year (192 million euros). The net loss for the first nine months amounted to 7 million euros (against 119 million euros profit for last year). It was affected substantially by the posting of a 14 million euro write-down as a result of Xeikon, in which Agfa has a 25 percent stake, filing for legal protection and Agfa's share in Xeikon's operating loss (12 million euros).
The Technical Imaging share of group sales rose from 32 to 36 percent relative to the first nine months of 2000. The Graphic Systems share is unchanged from last year at 39 percent and Consumer Imaging has a current share of 25 percent (29 percent last year).
The Graphic Systems Business Segment, which embraces the Electronic Prepress, Photographic Prepress and Offset Printing Systems Business Units, posted 1,416 million euros sales for the first nine months of 2001. This equates to a drop of 7.3 percent against this period in 2000 or 5.3 percent for continuing operations (excluding Digital Printing Systems). EBIT amounted to 62.5 million euros, some 39 percent less than that of the first three quarters of last year (102 million euros, including DPS).
The main reason for this decline was the weaker economic situation, especially in the US, which among other things resulted in a substantial drop in commercial printing production. Agfa was able to maintain its market share in graphic film although the accelerated transition from Computer-to-Film (CtF) to Computer-to-Plate (CtP) continued also in the third quarter. For Computer-to-Plate (digital plates as well as equipment) Agfa managed to increase its market share significantly.
In the third quarter the continuing weakening of the economic outlook has forced customers in the printing industry to take a more cautious approach, causing them to postpone investment in capital equipment. The events of 11 September 2001 have further accentuated this trend.
In September 2001 Agfa and Autologic signed a final agreement for Agfa to acquire this American company. The acquisition of Autologic fits in with Agfa's strategy of developing and marketing advanced digital pre-press and print production systems for the newspaper industry. Autologic's strong position in the market will also increase the market penetration of our consumables.
In the Technical Imaging Business Segment, dominated by the HealthCare (previously known as Medical Imaging) and Non-Destructive Testing (NDT) Business Groups, sales in the first three quarters of 2001 rose by 7 percent to 1,328 million euros against the same period in 2000 (1,240 million euros). EBIT were down by 28.7 percent compared with the outstanding first nine months of 2000 and now stands at 141.3 million euros.
HealthCare sales increased in the first nine months of the year relative to the same period last year, mainly due to the impact of increased demand for hard copy products and digital solutions for hospitals. However, a certain reluctance on the part of customers is also evident here as a result of the economic slowdown and the events of September in the US.
EBIT for the first nine months of this year were adversely affected by increased investment in Research and Development and increased production and sales costs. The increase in sales cost is mainly attributable to building up the sales network for digital solutions.
Agfa has acquired a minority shareholding in MediVision as part of its strategy to expand into new areas of imaging and healthcare information management in addition to radiology. Among other things, these companies are to jointly develop an integrated PACS system (Picture Archiving and Communication System) for ophthalmic applications. In September Agfa announced that it had signed a letter of intent to acquire its technology partner Mitra. This company is a leading supplier of image processing and information management systems for the healthcare sector. Mitra has already played a significant part over the last ten years in the development and success of Agfa's IMPAX systems (PACS).
NDT sales grew very strongly relative to the first three quarters of 2000. This growth can be attributed to the effect of the acquisition of Krautkramer on the one hand and to growth in sales posted by film operations on the other. This growth was especially evident in the energy sector.
In the third quarter Agfa completed two strategic acquisitions in the field of non-destructive testing. The companies acquired, Seifert and Pantak are market leaders in Europe and the United States respectively in the field of real time imaging applications.
Consumer Imaging embraces the Film, Finishing (photographic paper and chemicals), Laboratory Equipment and Consumer Digital Imaging (CDI: digital cameras and scanners) Business Units. Due, among other things, to the economic slowdown of the first nine months of 2001, the Consumer Imaging Business Unit posted sales of 933 million euros, a drop of 18.6 percent against the same period last year. EBIT in the first nine months of 2001 amounted to 3.9 million euros, against 92.7 million euros in the same period of 2000.
Sales of the CDI Business Unit for the first nine months of 2001 were approximately 40 percent less than that of the same period last year. Agfa will have withdrawn from this market towards the end of the year. The costs involved in doing so severely depressed Consumer Imaging EBIT also.
Finishing held up best out of the various business units, thanks to good performance in Europe in particular. The Film business, however, continued to fall sharply. This autumn, Agfa captured a major international account in the form of Wal-Mart, the largest chain of stores in the world. The first deliveries of film to this important customer will take place in the fourth quarter of 2001.
Laboratory Equipment sales for the first three quarters were down substantially on the same period last year in which outstanding results were posted. However, the tide appears to be turning at present with the introduction of Agfa's digital minilabs to the market. In August and September we were able slightly to exceed last year's sales for Laboratory Equipment for the first time this year.
In the first nine months of 2001, Europe accounted for 51 percent (49.4 percent last year) of group sales. The NAFTA (US, Canada and Mexico) region's share is now 28 percent (29 percent last year). Sales in the Asia/Oceania and Africa region dropped by 8 percent such that this region's share is now 16.5 percent. With a 6 percent decline in sales, the Latin American region accounted for 4.7 percent of group sales.
Agfa has launched the Horizon plan in order to improve profitability. The restructuring costs involved are estimated at 550 million euros. Since it is now estimated that a large part of it will be charged to the current accounting period, with the balance being charged to 2002, Agfa will incur a net loss in 2001. The annual savings to be achieved by the Horizon plan will also amount to approximately 550 million euros. They will already have positive effects in 2002, will be substantially realized in 2003 and will reach their full beneficial effect as from 2004.
The implementation of the Horizon Plan has started. The first projects required to contribute to it have already been announced: consolidation of Agfa's graphic printing plate production in Europe and the 25 million euro investment in a new production line in China on the one hand and the Genesis project on the other, in which far-reaching restructuring of subsidiaries in the NAFTA region is to be carried out. It is Agfa's wish to complete the information and consultation stage which is currently underway at the Mortsel headquarters in the next few weeks.
Consolidated key figures* for the first nine months of 2001
Euro million 2001 2000 %
9 months 9 months
Net sales 3,677 3,914 -6.1
Operating result 122 282 -56.7
Non operating result (96) (90) -6.7
Profit before taxes 26 192 -86.5
Profit after taxes 18 124 -85.5
Share of results of associated companies (26) (5) -420.0
Minority stockholders interest 1 -
Net result (of the accounting period) (7) 119 -105.9
EBIT** 208 393 -47.1
Gross operating cash flow 235 400 -41.3
Net operating cash flow 348 340 +2,4
(*) non-audited, consolidated figures following IAS evaluation rules
(**) EBIT = Operating result before restructuring and non-recurring results
The Agfa-Gevaert Group is one of the world's leading imaging companies. Agfa develops, manufactures and sells analogue and digital systems, destined mainly for the graphics industry, healthcare, non-destructive testing, micrography and cine film, as well as consumer-oriented desktop publishing and photography.
Agfa has its headquarters in Mortsel, Belgium, employs approximately 22,000 people in 40 countries and has 120 agents throughout the world. Together they achieved sales of 5,260 billion euros in 2000.
You will find more information on Agfa and its products at: www.agfa.com
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.