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Agfa Profit on 5 Year High in Q2 Results

Wednesday, August 26, 2015

Press release from the issuing company

Mortsel - Belgium - Agfa-Gevaert today announced its second quarter 2015 results.

“I am very pleased to see that the positive signs we saw in the first three months of the year were confirmed in the second quarter. This strengthens our belief that we are on the right track to reach the targets we expressed when we published our full year 2014 results. Based on the strong performances of our main growth engines and helped by the weaker Euro, we were able to post significant revenue growth. I trust that in the medium term a revenue of 3 billion Euro is achievable. Largely due to our successful efficiency programs, we were able to bring our gross profit margin above 33 percent of revenue for the first time in five years. It is also clear that we are well on our way to achieving a recurring EBITDA percentage close to 10 percent of revenue in 2015,” said Christian Reinaudo, President and CEO of the Agfa-Gevaert Group.

Agfa-Gevaert Group - second quarter 2015 

Euro millions Q2 2014 Q2 2015 % change
Revenue 651 691 +6.1%
Gross Profit (*) 207 229 +10.6%
% of revenue 31.8% 33.1%  
Recurring EBITDA (*) 63 72 +14.3%
% of revenue 9.7% 10.4%  
Recurring EBIT (*) 46 56 +21.7%
% of revenue 7.1% 8.1%  
Result from operating activities 44 48 +9.1%
Result for the period 28 25 -10.7%

(*) before restructuring and non-recurring items.

Continuing the trend of the previous quarters, the Agfa-Gevaert Group’s revenue grew by 6.1 percent to 691 million Euro. The top line growth was supported by the good performances of the Group’s growth engines (including the Agfa Graphics business group’s inkjet business and the Agfa HealthCare business group’s Direct Radiography and IT solutions), as well as by positive currency effects.

Targeted efficiency programs allowed the Group to improve its gross profit margin to 33.1 percent of revenue, compared to 31.8 percent in the second quarter of 2014 and 31.7 percent in the first quarter of 2015.

As a percentage of revenue, Selling and General Administration expenses remained stable at 19.2 percent.

R&D expenses amounted to 37 million Euro, or 5.4 percent of revenue.

Recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) and recurring EBIT improved to 10.4 percent and 8.1 percent of revenue respectively.

The expense related to the restructuring and non-recurring items amounted to 8 million Euro, versus 2 million Euro in the second quarter of 2014.

The net finance costs remained stable at 14 million Euro. The Agfa-Gevaert Group closed a new revolving facility of 400 million Euro, which will run until July, 2020.

Tax expenses amounted to 9 million Euro, compared to 3 million Euro in the previous year.

As a result of the elements mentioned above, the Agfa-Gevaert Group posted a strong net profit of 25 million Euro.

Financial position and cash flow

  • At the end of the quarter, total assets were 2,551 million Euro, compared to 2,548 million Euro at the end of 2014.
  • Inventories amounted to 575 million Euro (114 days), versus 561 million Euro (107 days) in the second quarter of 2014. Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 371 million Euro (48 days), versus 399 million Euro (55 days) in 2014, and trade payables were 239 million Euro (47 days), versus 241 million Euro (46 days).
  • Net financial debt amounted to 102 million Euro, versus 126 million Euro at the end of 2014.
  • Net cash from operating activities amounted to minus 1 million Euro.

Agfa Graphics - second quarter 2015 

Euro millions Q2 2014 Q2 2015 % change
Revenue 339 349 +2.9%
Recurring EBITDA (*) 28.9 20.0 -30.8%
% of revenue 8.5% 5.7%  
Recurring EBIT (*) 21.5 12.5 -41.9%

(*) before restructuring and non-recurring items. 

Helped by the weaker Euro and based on the good performance of the inkjet segment, Agfa Graphics was able to reverse the downward revenue trend. In the prepress segment, the digital computer-to-plate (CtP) business suffered from competitive pressure. The analog computer-to-film (CtF) business continued to decline strongly. Overall, the Agfa Graphics business group also continued to feel the effects of the softness in the emerging markets and the political instability in certain regions.

As Agfa Graphics’ efficiency projects were not able to fully offset the adverse raw material and competitive pressure effects, the business group’s gross profit margin decreased from 28.5 percent of revenue in the second quarter of 2014 to 28.1 percent. Recurring EBITDA amounted to 20.0 million Euro (5.7 percent of revenue). Recurring EBIT reached 12.5 million Euro (3.6 percent of revenue).

In the field of inkjet, the ink portfolio for industrial applications and the new Jeti Mira and Jeti Tauro wide format print engines started to contribute to the business group’s top line. 

At the FESPA trade event, largely targeted at sign and display producers and wide format printers, an important inkjet contract was signed with the Danish Scanprint A/S company (part of Stibo Graphics). Already being the business group’s largest commercial prepress customer in the Nordic region, Scanprint A/S now also selected Agfa Graphics’ inkjet solutions - including the Jeti Tauro printer, the Acorta cutting and finishing plotter and the Asanti workflow software - for its new wide format production department. 

Also in the field of inkjet, Agfa Graphics won EDP Awards for its Asanti Color Management solution and its Anapurna M3200i RTR wide format printer. The European Digital Press Association grants the awards to the best products of the year introduced in the European market.

In the field of prepress, Agfa Graphics signed a number of eye-catching contracts with commercial print companies including Daeryuk Can (South Korea), Impresos Específicos (Mexico), Gulf News (United Arab Emirates) and Caxton (South Africa). 
South Korea’s main business newspaper – Maeil Business Newspaper – is now printed with Agfa Graphics’ N94-V printing plates. Maeil Business Newspaper operates from three production sites.

Targeting the high-volume newspaper market, Agfa Graphics introduced its new Advantage N TR VHS high-speed platesetter in June. Producing up to 400 printing plates per hour, the platesetter allows newspaper publishers to use their equipment more efficiently and to deliver their latest news and last-minute offers with sharper production deadlines. 

Furthermore, the business group introduced two innovations for the security printing market. Fortuna 9 is the new version of Agfa Graphics’ design software for high-end security printing of – among other applications – passports, ID documents, tax stamps and lottery tickets. The new Arziro plugin for Adobe Illustrator is the ideal design software for companies involved in het design and production of applications such as packaging and labels, tickets, post stamps, bank cards, certificates and diplomas.

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