Log In | Become a Member | Contact Us


Leading printing executives into the future

Connect on Twitter | Facebook | LinkedIn

Featured:     European Coverage     Production Inkjet Analysis

Océ reports improved results

Thursday, January 27, 2011

Press release from the issuing company

Highlights fourth quarter (ended November 30, 2010):
- Total revenues + 5% to € 715 million (2009: € 683 million)
- Organically, non-recurring revenues + 1%; recurring revenues − 2%
- Normalized operating income doubled to € 29 million (2009: € 14 million)
- One-off items of € 36 million impacted net income
- Phase in of Canon product portfolio completed
- Change of fiscal year, effective January 1, 2011

Comments by Rokus van Iperen, Chairman of the Board of Executive Directors:
'It is encouraging that we have improved our normalized operating income for the third consecutive quarter. Our bottom line was impacted by substantial customary one-off items.

Profitability improved, due to better utilization of our plants and the results of our cost savings program. Customers continued to be cost conscious amidst ongoing economic uncertainty, but revenue development improved versus the trend of previous years.

Certain markets showed clear signs of recovery. Revenues in continuous feed improved, benefiting from printer sales, particularly of the Océ JetStream series. Wide format revenues showed recovery, mainly driven by printer sales in the display graphics markets. Revenues in business services increased marginally, mainly due to growth in North America.

As of the third quarter 2010, we started selling Canon office printers, first in the US, followed shortly thereafter in Europe. Now, we offer Canon products to our customers worldwide.

In the quarter, we successfully participated in the prominent Canon Expo held in New York, Paris and Tokyo. At the Expo in Tokyo, we launched an innovative digital color continuous feed system, the Océ ColorStream 3500. This very high volume inkjet printer was developed at our German technology plant and enables Canon and Océ to serve commercial printing companies wishing to offer both analogue and digital color printing systems. This year too, we will participate in the Canon Expo to be held in Shanghai in May 2011.'

Change of fiscal year

As announced previously, Océ has aligned its financial reporting with Canon's, consequently starting the new fiscal year on January 1, 2011. To facilitate transparency and comparison, the figures presented in this press release relate to the period September-November 2010 and the corresponding prior year period.

Additionally, by exception, this press release provides data over December 2010, as this is the fourth month in Océ's reported Q4 2010 (see page 4).

One-off items

Following the completion of the Canon offer, Océ anticipated and announced substantial one-off items, of which a large portion was reported in the Q2 2010 results. As these one-off items strongly impacted net income, a detailed explanation is provided in an overview of one-off items in the reported Q4 2010 (September-December).

Group results fourth quarter 2010

Revenues

Total revenues increased 5% to € 715 million, due to foreign exchange effects.

Organic growth was –1%.

Our share of color grew to 35% of revenues (2009: 34%).

Non-recurring revenues increased 7% to € 231 million. The organic increase was 1%. The growth came mainly from North America and the emerging markets and was strong in WFPS.

Recurring revenues increased 4% to € 484 million. The organic decline was 2%, in line with the third quarter.

Cost savings program

The increase in normalized operating income was partly the result of the cost savings program. In the fourth quarter, Océ reduced costs by € 15 million, excluding inflation and restructuring costs. Year to date, Océ reduced headcount by 984 FTEs compared to the fourth quarter of 2009 (890 FTEs up to the third quarter of 2010).

Gross margin and operating income

In the fourth quarter of 2010, normalized gross margin was 38.3% (2009: 38.4%). Compared to the fourth quarter of 2009 the changes in currency exchange rates caused a negative hedge variance of € –7.0 million, leading to a gross margin decrease of 1.0% point.

The gross margin increase for DDS and WFPS in total amounted to 0.7% point, mainly due to better utilization of the factories in Venlo and Poing and the aforementioned action program.

OBS gross margin increased by 0.2% point, mainly due to changes in the business mix and operational improvements.

Normalized operating expenses amounted to 34.3% of revenues (2009: 36.3%), due to the impact of the action program.

Net R&D capitalization amounted to € 7.7 million, which is € 4.4 million lower compared to the fourth quarter of 2009 (€ 12.1 million).

On balance, normalized operating income amounted to € 29 million (2009: € 14 million). Operating income amounted to € –29 million (2009: € –7 million), including € –58 million one-off items.

Finance expenses (net) and net income

As a result of the refinancing of Océ's debt by Canon, interest costs decreased compared to last year. Finance expenses (net) amounted to € –8 million (2009: € –4 million).

On balance, net income was € –27 million (2009: € –23 million).

Earnings per ordinary share for net income attributable to shareholders was € –0.29 (2009: € –0.28).

Océ Group provisional results 2010

Océ's financial year 2010 consists of thirteen months as Océ has aligned its financial reporting with Canon's, consequently starting its new fiscal year at January 1, 2011. However, the figures (including comments) presented in this paragraph relate to the twelve months period from December 2009 - November 2010 and the corresponding prior year period.

Total revenues increased by 1% reflecting improving non-recurring revenues. Excluding foreign currency exchange rate effects, revenues decreased organically by 2%.

Non-recurring revenues increased organically by 1%. Recurring revenues decreased organically by 3%.

Total normalized gross margin was 38.2% (2009: 37.4%). The gross margin improved due to better factory utilization and the aforementioned action program.

Normalized operating expenses as a percentage of revenues amounted to 35.5% (2009: 36.0%).

Normalized operating income amounted to € 72 million (2009: € 37 million).

Normalized finance expenses (net) amounted to € –32 million (2009: € –37 million).

Taxation impacted net income by € –17 million (2009: € 3 million).

On balance, net income amounted to € –122 million (2009: € –47 million).

Balance sheet and RoCE

The balance sheet total was € 2,252 million (2009: € 2,207 million) at the end of the fourth quarter of 2010. Net Capital Employed was € 1,093 million (2009: € 992 million). In relation to normalized operating income, RoCE amounted to 5.2% (2009: 2.5%). The aforementioned balance sheet and Net Capital Employed were impacted by the Canon related one-off items.

Free cash flow

Free cash flow in 2010 was € –104 million (2009: € 82 million), mainly due to € –68 million Canon related one-off items and the reduction of creditors and liabilities of which € 44 million due to payments related to restructuring (not change of control related).

Océ Group results December 2010

In connection with the change of the fiscal year per January 1, 2011, Océ provides by exception separate data on December 2010.

Total revenues decreased by 0.6% due to lower nonrecurring sales in most segments. Excluding foreign currency exchange rate effects, revenues decreased organically by 6.5%.

Operating income in December was € –39.9 million, including € –31.5 million normalization items. Normalized operating income was € –8.4 million in the month.

Overview one-off items in period September – December 2010

In this period, Océ incurred € –90 million one-off items, largely related to change of control, impacting gross margin and operating expenses. The related consequence on net income was € –67 million. € –3 million of these € –90 million relate to restructuring items which are not change of control related.

The gross margin included € 41 million one-off costs. This was mainly related to write off of inventories (both machines and spare parts) following the changes in the product portfolio from several OEM suppliers to Canon.

The one-off items related to operating expenses amounted in total to € 49 million. These costs come mainly from impairment of purchased software, Canon related integration costs (such as training programs) and impairment of assets specifically designed for Konica Minolta.

The income tax effect of in total € 25 million results from the aforementioned items and from changes in the valuation of tax assets and liabilities.

Update cooperation with Canon

Early 2010, Océ determined three priorities for the
fiscal year, related to the cooperation with Canon:
- Start cross selling products;
- Joint product development;
- Prepare for integration.

After the summer of 2010, Océ started selling Canon products, first in the US, followed thereafter by Europe. By year-end 2010, Océ offered Canon products to its customers worldwide. In order to facilitate the Océ sales force to successfully sell Canon products, Océ created a special 'Canon Camp', a two day training and information program on Canon and its printing systems for hundreds of sales and service representatives in Europe. Previously, a similar initiative was held in the United States. Customers worldwide respond positively towards Océ selling Canon products.

Teams of Canon and Océ research and development specialists are jointly creating innovative small format and wide format printing systems, benefiting from technology and expertise available throughout the combination. The first jointly developed Océ-Canon products will be launched in 2011.

Progress has also been achieved with regard to preparing the integration. Across regions and functions, several teams, consisting of Canon and Océ specialists, are building the design of an integrated organization. These preparations are progressing according to plan.

In the quarter, Océ successfully participated in the prominent Canon Expo, held in New York, Paris and Tokyo. At the Expo in Tokyo, Océ launched the innovative very high volume digital color continuous feed inkjet system Océ ColorStream 3500, developed at Océ's German technology plant. This new inkjet printer enables Canon and Océ to serve the commercial printing companies, wishing to offer both analogue and digital color printing systems. In 2011, Océ will also participate in the Canon Expo in Shanghai, to be held in May 2011.

Key figures per Strategic Business Unit fourth quarter 2010*

SBU results fourth quarter

This paragraph provides an overview of developments in the Strategic Business Units for the period September - November 2010, excluding oneoff items, as described in the previous paragraph.

Digital Document Systems (DDS)

Revenues in DDS amounted to € 386 million. Organically, revenues declined by 4%. The share of color declined to 26% of revenues (2009: 29%), due to ongoing cost consciousness of customers.

A strategic alliance with manroland was announced in December. This alliance consists of cooperation in product development and go-to-market strategies.

The quarter was characterized by the phase out of Konica Minolta and the phase in of Canon office products. In the quarter, Océ trained its workforce to sell and service Canon systems. By year-end 2010, Océ offered Canon printers to customers worldwide.

Non-recurring revenues amounted to € 140 million. Organically, revenues decreased by 9%, whereby the decline came especially from the cutsheet office segment. Recurring revenues amounted to € 246 million. Organically, revenues declined by 1%.

Normalized operating income improved to € 7 million (2009: € –1 million), thanks to a better product mix and because of cost reductions as a result of the earlier mentioned action program. Also better utilization of especially the Poing plant benefited operating income.

Wide Format Printing Systems (WFPS)

Compared to the fourth quarter of 2009 the WFPS revenues showed recovery, mainly driven by nonrecurring revenue development of Display Graphic Systems. Recurring revenues were lagging behind.

Revenues in WFPS amounted to € 208 million. Organically, revenues grew by 5%. The share of color increased to 54% (2009: 47%). WFPS introduced the Océ ColorWave 300, a new single footprint all-inone wide format printer for copying, printing and scanning. Also, customers responded positively to the newly introduced Océ CS2400 color system for the technical documentation market. Among commercial printshops producing billboards and displays for retailers, amongst others, the new wide format graphics printer, the Océ Arizona 550 XT received a lot of attention, specifically for the size of its flatbed and its productivity.

Non-recurring revenues amounted to € 91 million. Organically, revenues increased by 21%. Growth was mainly driven by both North America and Asia.

Recurring revenues amounted to € 117 million. Organically, recurring revenues declined by 5% mainly as a result of decreasing click volumes.

Normalized operating income increased to € 15 million (2009: € 10 million) reflecting improved business volumes.

Océ Business Services (OBS)

Revenues in OBS amounted to € 121 million. Organically, revenues increased by 1%. Revenue growth was driven by the North America region, despite lower print volumes. In Europe, OBS implemented a Pan-European organization, supporting Océ operating companies to improve their OBS practice and performance.

Normalized operating income improved to € 7 million (2009: € 5 million), due to higher gross margins, tight operational expense management and mix improvement.

Dividend proposal

In line with our dividend policy Océ will propose to shareholders that no dividend will be declared over 2010.

Outlook

Main priority for Océ in 2011 is to continue to improve the business by focusing on revenue, profit and cash. Océ will grow the business by strengthening its position in mature markets, expanding in growth markets like graphic arts and document services and boosting cross selling with Canon. Also, jointly with Canon, Océ will invest in regional growth markets like China and India. In 2011, Océ will expand its product portfolio, amongst others by introducing new printing systems, jointly developed with Canon. Finally, the company will continue to prepare for the integration with Canon.

Board of Executive Directors Océ N.V.
January 26, 2011

* The 2010 figures in this report are unaudited.

 

Post a Comment

To post a comment Log In or Become a Member, doing so is simple and free

 

SHARE

Email Icon Email

Print Icon Print

Become a Member

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

Copyright © 2016 WhatTheyThink. All Rights Reserved