Log In | Become a Member | Contact Us

Market Intelligence for Printing and Publishing

Connect on Twitter | Facebook | LinkedIn

Featured:     M&A Trends     Production Inkjet     Installations and Placements Tracker

Oce Announces Q1 Results: Revenues Up 21%

Wednesday, April 05, 2006

Press release from the issuing company

CHICAGO, April 4 -- Oce N.V. -- Comments by Executive Board Chairman Rokus van Iperen: On the integration of Oce Imagistics: 'The integration of Oce Imagistics is progressing well. We will realize the cost savings planned for 2006. In the meantime the first joint commercial results have been achieved. Several Imagistics customers have become customers of Oce Business Services. Other Imagistics customers have ordered Oce printers that could not previously be supplied by Imagistics. Thanks to the Oce Imagistics combination, a new, full-line supplier has been created in the United States whose strength has been noted by the market. The synergies planned for 2006 will mainly show through in the results in the second half of this year.' On the first quarter results: 'The revenues of DDS have increased considerably thanks to the acquisition of Imagistics, which has been included in the consolidation for a full quarter for the first time. The revenues of WFPS likewise showed a good increase. This reflects our leading position in the wide format market. The results indicate that Oce is continuing the upward line. However, much still has to be done. The achievement of the synergies with Imagistics, the reduction of product cost and operating expenses combined with the competitive strength of our products will lead to improvement of margin and cash flow.' On the products: 'In recent years, despite the sometimes difficult economic climate, we have continued to invest in the innovation and improvement of our products. Partly as a result we introduced twenty new products last month, the most important ones being the Oce VarioPrint 6250 and the Oce TCS500. The Oce VarioPrint 6250 is the world's fastest digital machine for duplex printing for the commercial and corporate markets and is based on an entirely new concept. Results first quarter 2006 Effective with the 2006 financial year, Oce is reporting on the basis of IFRS. To enable a comparison with the prior year, the income statement and the balance sheet for 2005 have also been prepared on the basis of IFRS. A press release about this was published on March 31, 2006 and details can be found on our website http://www.investor.oce.com . Operating income in the first quarter of 2005 was Euro 0.9 million lower under IFRS than under Dutch GAAP. The principal change in the income statement relates to the inclusion of the costs of share-based schemes [specifically stock options], which amounted to Euro 1.3 million in the first quarter of 2005. For this reason the comparative figures for 2005 shown in this press release differ from the figures published in the previous year. As of the first quarter of 2006, innovation costs, which were formerly classified as manufacturing costs, have been included in the R&D costs. As a result, the gross margin has increased in 2006 by Euro 10.0 million [2005: Euro 8.8 million]; operating expenses have increased by the same amount. The comparative figures for 2005 have been restated to reflect these changes. Total revenues in the first quarter increased by 21.1% to Euro 754.1 million. This increase was achieved through the acquisition of Imagistics and exchange rate effects. Exchange rates had the effect of increasing revenues by 4.2%. Thanks to the acquisition, non-recurring revenues were 16.1% higher. After adjustment for exchange rates, the increase amounted to 12.4%. This increase in revenues is relatively limited due to the fact that an exceptionally high increase was achieved in the first quarter of 2005. Recurring revenues increased by 23.0%, of which 4.4% was the result of exchange rates. The increase in recurring revenues was, besides the acquisition, attributable to higher revenues from services. The gross margin increased by 1.0% to 42.9%. The net effect of exchange rate results and foreign exchange hedges amounts to -0.1%; a release of pension liabilities in the United States accounts for 0.6% of the increase, while volume/mix effects contributed 0.5%. Operating expenses as a percentage of total revenues increased by 0.2% to 39.8%. After adjustment for exchange rates and exceptional items, operating expenses showed a slight decrease. Operating income amounted to Euro 23.7 million [2005: Euro 14.0 million]. On the one hand this result was positively influenced by the above-mentioned release of pension liabilities in the United States as a consequence of a change in the pension scheme [Euro 11.8 million]. On the other hand, a number of exceptional items had the effect of depressing the operating income. Restructuring and integration costs amounted to Euro 3.7 million. The IFRS accounting rules for share-based schemes reduced operating income by Euro 2.7 million [in 2005: Euro 1.3 million]. Because of the increase in the Oce share price in the first quarter, the liability that Oce has in respect of share-based schemes increased by the above-mentioned amount. Due to the sale of the lease portfolio operating income decreased by Euro 2.6 million as compared to the first quarter of 2005 because of lower book profits and lower revenues from lease interest. Financial expense [net] amounted to Euro 12.6 million [2005: Euro 3.1 million]. This item includes Euro 1.1 million as a result of the fact that under IFRS the financing preference shares and a minority interest have been reclassified from total equity to debt. Since Oce and the relevant financiers have changed the conditions for these financing instruments, these items will again be classified as total equity. As regards the financing preference shares, this reclassification is conditional on approval by shareholders at the General Meeting of Shareholders on April 20, 2006. A substantial proportion of income was achieved in countries with a relatively low tax charge. Furthermore, losses that can be compensated are largely accounted for against nominal tax rates. On balance, this meant that taxes contributed Euro 0.7 million to net income. Net income amounted to Euro 11.9 million [2005: Euro 8.3 million]. Net income per ordinary share outstanding amounted to Euro 0.14 [2005: Euro 0.09]. Results by Strategic Business Unit The results of the Strategic Business Units are shown on the basis of IFRS. For 2005 these differ from the figures published last year. However, the differences are relatively limited. In Digital Document Systems [DDS], the integration of Imagistics International Inc., which was acquired in October 2005, is progressing favorably. The integration of the marketing and sales organizations has already taken place. The amalgamation of regional offices is also in full swing and will be completed in mid-2006. There is therefore every reason to expect that the anticipated synergies will be realized. The positive development of the integration process and the potential synergies provide confidence that during the year 2006 Oce Imagistics will make a clearly positive contribution to the result of Digital Document Systems and hence to the result of Oce. In DDS revenues increased by 26.9% from Euro 434.4 million to Euro 551.1 million. Of this increase, 3.8% was the result of exchange rates. Non-recurring revenues increased by 18.6%, of which 2.8% resulted from exchange rates. Recurring revenues increased by 29.9%. Excluding the exchange rate effect, the increase amounted to 25.7%. The above-mentioned increase in revenues results in full from the acquisition of Imagistics and exchange rate effects. The operating income of DDS was Euro 6.6 million [2005: Euro 4.3 million]. On balance, this result was positively influenced by a release of pension provisions in the United States. We expect the result of DDS to develop positively in the forthcoming quarters. The Wide Format Printing Systems [WFPS] Strategic Business Unit had an excellent quarter. Revenues increased by 7.7% to Euro 203.0 million. Of this increase, 4.9% was the result of exchange rate effects. Both non-recurring and recurring revenues, excluding exchange rate effects, increased by 5.7% and 1.5% respectively. Operating income increased by 76.5% to Euro 17.1 million [2005: Euro 9.7 million]. WFPS is deriving maximum benefit from the recent product introductions and an increase in demand for color consumables which are giving rise to healthy growth in revenues and income. In addition, the exceptional items also had a positive impact on the result of WFPS. Particularly in the market for technical documentation [TDS], in which Oce holds a leading market position, the results were good. Both in the high volume and in the digital low volume segment, substantial revenues growth was booked. In the color segment, too, Oce is building up an increasingly stronger position, both with its own products and with third-party products. At the end of March Oce again launched a number of important new products at OpenHouse 2006, our own trade show for customers, potential customers, analysts and the press. Highlights were the Oce TCS500, a highly productive color printer for the technical documents market, the Oce VarioPrint 6250, the fastest digital duplex printer for the commercial and office markets, and the Oce VarioStream 9330, a multi-color printer for transaction printing and the graphics market. With the printing systems [hardware and software] that were brought to market in the past few years, supplemented by the recent new introductions, Oce offers a very strong and complete product range for both Digital Document Systems and Wide Format Printing Systems. Balance sheet and cash flow The opening balance sheet as at December 1, 2005 has been adjusted compared to the closing balance sheet for the 2005 financial year, through the addition of "financial instruments" [IAS 32 and IAS 39]. As a result, the balance sheet total increased by Euro 20 million and total equity decreased by Euro 100 million. The decrease was caused by the previously mentioned reclassification of preference shares [Euro 57 million] and a minority interest [Euro 37 million] from total equity to debt. At the end of the first quarter of 2006, the conditions attaching to a minority interest have been changed in such a way that this again will be included in as total equity. Provided that the changed conditions for the preference shares are approved by shareholders at the forthcoming General Meeting of Shareholders, the preference shares will again be classified as equity at the end of the second quarter. The balance sheet total amounted to Euro 2,741 million. This is a reduction of Euro 120 million as compared to the IFRS opening balance sheet for the 2006 financial year. Lease and trade accounts receivable decreased by Euro 27 million and cash balances by Euro 83 million. Shareholders' equity [excluding minority interest] increased slightly during the quarter [Euro 14 million]. The free cash flow was Euro 64 million negative [2005: Euro 52 million negative]. Operational cash flow was Euro 52 million negative. The increase in inventories amounted to Euro 24 million, while trade accounts receivable decreased by Euro 39 million. In addition, there were substantial, seasonally linked payments of costs that had already been provided for in previous quarters. The cash flow from investing activities was Euro 12 million negative [2005: Euro 3 million negative]. Net investments in tangible and intangible assets [Euro 23 million] were only offset in part by the sale of the still existing lease portfolio [Euro 11 million]. During 2006 the cash flow will improve and a positive cash flow is expected for the full year. Prospects The Board of Executive Directors is maintaining the expectation that it made in January that revenues will increase, partly thanks to the acquisition of Imagistics. Operating income will be depressed because of higher R&D expenditure, restructuring costs, the amortization of intangible assets and lower revenues from leases. On the other hand this will be compensated by savings from the restructuring operations in Europe and the United States and by the synergies achieved through the integration of Oce Imagistics. However, it is still too soon to pronounce a concrete expectation for the result for 2006.




Email Icon Email

Print Icon Print

Become a Member

Join the thousands of printing executives who are already part of the WhatTheyThink Community.

Copyright © 2019 WhatTheyThink. All Rights Reserved