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Oce Results Financial Year 2002, Sales Down Slightly

Tuesday, January 14, 2003

Press release from the issuing company

VENLO, Netherlands, Jan. 13 -- Oce N.V., one of the world's leading companies in the area of document management, today reported operating results for the fourth quarter and fiscal year ended November 30, 2002. Fourth quarter Financial year 2002 2002 In million euro Total revenues 811.0 (- 5.4%) 3,176.1 (- 1.8%) EBITDA 119.4 (+ 4.3%) 423.2 (+ 1.0%) EBIT 70.1 (+ 13.0%) 226.1 (+ 0.6%) Net income** 37.8 (+ 23.2%) 112.5 (+ 7.1%) In euro Net income per share** 0.44 (+ 24.1%) 1.30 (+ 8.8%) -- Oce net income increases in 2002 by 7.1% compared to 2001. -- Net income per share amounts to euro 1.30; this is 8.8% higher than in the previous year. -- Total assets reduced by euro 257 million (8%) compared to 2001 financial year. -- Restructuring is well on track. -- Oce proposes to pay shareholders unchanged dividend for 2002 financial year of euro 0.58 per ordinary share of euro 0.50 nominal. -- Market conditions make it impossible to give a forecast for 2003. -- * The figures for the bookyear 2002 and fourth quarter contained in this report are unaudited. The figures are drawn up on the basis of Dutch GAAP; as compared to the Annual Financial Statements for 2001 no changes have taken place in the financial reporting principles. The definitive results, including the consolidated balance sheet, the summary statement of shareholders' equity and a summary cash flow statement, will be published on 31 January 2003. ** Before exceptional items in 2001. Results fourth quarter 2002 Total revenues in the quarter decreased to euro 811 million (- 5.4%) compared to the corresponding quarter of 2001; on an autonomous basis the decrease amounted to 4.0%. The gross margin was 43.7%, substantially higher than in 2001 (2001: 41.6%). Operating expenses were reduced by almost 4% compared to 2001; this was attributable in part to the restructuring measures. Operating income (EBIT) increased as a result to euro 70.1 million, which is 13% higher than in 2001. Lower interest charges and a higher effective tax rate resulted on balance in a higher net income of euro 37.8 million (+ 23.2%). Net income per ordinary outstanding share amounted to euro 0.44 (2001: euro 0.35). During the fourth quarter the organisational changes within the framework of the restructuring operation were completed on schedule. November 2002 saw the introduction of 7 new printers and various software applications. This was the biggest product launch in Oce's history. During the quarter 619,102 shares were bought in to cover commitments under existing option plans. The average purchase price was euro 9.74 per share. Results financial year 2002 Total revenues were euro 3,176.1 million (1.8%) lower than in 2001. The autonomous decrease amounted to 3.1%. Exchange rate effects had a negative impact (- 2.1%), whilst the effects of acquisitions were positive (+ 3.4%). The 17% decrease in machine sales was largely compensated by higher revenues from services and software. The gross margin amounted to 41.8%, which was above that in 2001 (40.7%). Thanks to foreign currency hedging a positive effect of 1.1% was achieved. In addition, the effect of capacity under-utilisation as a result of lower machine sales was offset by lower costs and the phasing out of poorly performing activities. Operating expenses increased slightly (+ 0.9%). If exchange rate changes and the influence of acquired businesses are excluded, operating expenses were down by 3% on an autonomous basis in 2002. The reduction is the result of tight cost control and the impact of the restructuring measures. Operating income (EBIT) amounted to euro 226 million, which was slightly higher than in the previous year. EBITDA rose to euro 423 million (2001: euro 419 million). Because of a decrease in interest-bearing loans (euro 295 million lower than at the 2001 year end) and lower interest rates, financial expense (net) was euro 54 million -- or 22% -- lower than in the preceding year (euro 69 million). The effective rate of income tax increased from 31.1% in 2001 to 33.4% in 2002. Net income was 7% higher than in 2001. Based on the weighted number of ordinary shares outstanding, net income increased by 9% to euro 1.30. The restructuring operation is well on track and the cost savings of euro 35 million planned for 2002 have been achieved. Of the planned reduction of 1,100 jobs, 74% has meanwhile been achieved. The phasing out of the low volume business is progressing according to plan and is almost half completed. As part of the outsourcing of the lease activities the definitive agreement has been signed with De Lage Landen International B.V. for the major European countries. This outsourcing operation will be implemented during 2003 and 2004. The sale of the lease portfolio in Scandinavia to Telia Finans AB was largely finalised. In 2002 lease debtors worth around euro 80 million were placed with third parties. Results of Strategic Business Units In Document Printing Systems (DPS) total revenues for the year amounted to euro 1,489 million (2001: euro 1,529 million). On an autonomous basis the decrease amounted to 2.8%. This decrease is attributable to lower machine sales (- 12%) and to the phased reduction of sales in the low volume segment of the office market. Thanks to the continuing strong growth of Facility Services (+ 17%) the overall decrease in sales remained within limits. The lower sales of machines meant that margins were squeezed, with the result that operating income before R&D costs worked out at euro 134 million (2001: euro 137 million). In November 2002 two new machines were introduced: the Oce Varioprint 2070 (65 ppm) and the Oce Varioprint 2090 (85 ppm). In Production Printing Systems (PPS) revenues went down to euro 749 million (2001: euro 793 million). Revenues decreased by 3.7% on an autonomous basis whilst the increase in services almost compensated the 25% lower machine sales. None the less the market position has been improved: Oce now has a leading position in continuous feed printing. In combination with lower operating charges, the operating income before R&D costs increased to euro 148 million (2001: euro 135 million). Within PPS two new product families were also introduced at the end of November 2002: the Oce Varioprint 5000 (158 ppm) and the Oce Variostream 7000 (200-1200 ppm). Revenues in Wide Format Printing Systems (WFPS) were euro 938 million (2001: euro 912 million). In design engineering revenues decreased by 2.9% on an autonomous basis. This was caused by fewer machine sales (- 13%) compared to 2001. Despite this, Oce maintained its market share. Thanks to acquisitions in Display Graphics total revenues in WFPS increased by 2.9% at current exchange rates. Operating income before R&D costs went up to euro 157 million (2001: euro 152 million). This increase was achieved thanks to a higher margin on sales and lower operating expenses. The integration of Gretag PID, now known as Oce Display Graphics Systems, has been completed. In November 2002 the Oce TCS400 was launched, a colour printer for the design engineering market. For the printing industry market the Oce Arizona 500 and the Oce T220 represent major new extensions to the product offerings. Geographical spread of activities Revenues in North America accounted for 42.5% of total revenues, with Europe contributing 52.0% and the Rest of the World 5.5%. Balance sheet Oce's good balance sheet position was strengthened further during the year. Total assets were reduced to euro 2,870 million. This is euro 257 million lower than at the end of 2001. The reduction is the result of a decrease in working capital and in long-term lease debtor receivables. Interest-bearing loans amounted to euro 846 million, which was euro 295 million lower than at the end of 2001. The Return on Assets (RoA) was 7.5% (2001: 7.1%). The Return on Equity (RoE) amounted to 12.4% (2001: 11.1%). Dividend A proposal will be made to shareholders that the dividend for the 2002 financial year be maintained at euro 0.58 per ordinary share of euro 0.50 nominal. If this proposal is adopted, the final dividend per ordinary share for 2002 will amount to euro 0.43 in cash. The interim dividend for 2002 amounted to euro 0.15 per ordinary share. Prospects The development of the economy remains uncertain and, linked to that, the willingness of our customers to make investments in our products and services. To date there are no indications that any significant improvement will occur in this situation over the short term. In view of this uncertainty and given the prevailing market conditions we feel it is not possible to give forecast of how things will develop in 2003. The restructuring measures we have initiated will bring a further reduction in operating expenses. It should be noted, however, that the relative weakness of the US dollar and an increase in the pension premiums will tend to depress our result for 2003. The new market-focused organisation structure, backed by the launch of several major new products, will positively boost Oce's competitive strength. That will put Oce in the best possible position to seize the opportunities that arise when the market picks up.




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