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Oce N.V. Reports 1Q Results, Acquisitions Help to Raise Revenue

Friday, April 05, 2002

Press release from the issuing company

VENLO, Netherlands, April 4 -- Consolidated unaudited results for the first quarter of fiscal 2002, ended February 28, 2002, were published today by Oce N.V. The first quarter of the Dutch-based supplier of digital document systems and services was in line with expectations.Revenues increased -- thanks to acquisitions and positive exchange rate effects -- by 3% compared to the first quarter of 2001. There was an autonomous decrease of 2.5% in revenues. Sales of machines in all Strategic Business Units were below the level of 2001. Revenues from software and services increased. Operating expenses were 6% higher than in the previous year. This increase is attributable almost in full to the acquisitions of Gretag Professional Imaging Division and Practical Print Solutions in 2001. On an autonomous basis (i.e. after adjustment for exchange rate and acquisition effects) the operating expenses were at the same level as in 2001. The relative gross margin was slightly above that of 2001 (40.9% compared to 40.7%). Positive exchange rate results (+1.2%) were partly cancelled out by volume/mix effects and underutilisation of manufacturing capacity. Operating income before depreciation and before amortisation of intangible assets (EBITDA) during the first quarter of 2002 was almost the same as that of 2001, i.e. Euro 104 million as against Euro 105 million. Operating income (EBIT) amounted to Euro 54.9 million, lagging behind 6% compared to last year. Financial expense (net) was down by 6%; the rate of taxation on income was 1.1% higher than in the previous year. The resultant net income amounted to Euro 25.8 million, a decrease of 8% compared to 2001. Based on the weighted average number of ordinary shares outstanding, net income was Euro 0.30 (2001: Euro 0.32). Cash flow (net income plus depreciation) per ordinary share was Euro 0.88 (2001: Euro 0.86). The actions to reduce working capital were continued during the first quarter. Inventories were 10% lower than in the first quarter of 2001 and trade accounts receivable (excluding lease receivable) expressed in days of revenues decreased by 8%. The outsourcing of the lease activities in Scandinavia has started and is progressing well. Detailed arrangements with De Lage Landen for outsourcing the lease portfolio in the rest of Europe are worked out. The restructuring that was announced in December 2001 is on schedule. In this phase this restructuring still does not have any influence on the results. Personnel numbers, excluding Facility Services and acquisitions, decreased by 200 during the quarter. Results by Strategic Business Unit Revenues in Document Printing Systems (DPS) decreased by 0.4% to Euro 372 million. This is due to the slowdown in sales of machines. A favourable exception was formed by the Oce CPS700 colour printer. At present, demand for this printer exceeds production capacity. A new production plant will become operational as from September 2002. Revenues in DPS showed an autonomous decline of 4%, whilst machine sales were 17% below those of 2001. In Facility Services revenues increased by 27%, 17% of which was autonomous. The operating income of DPS before R&D expenditure was Euro 28 million (2001: Euro 36 million). In Production Printing Systems (PPS) revenues were 6.2% higher than in 2001, amounting to Euro 204 million. The autonomous increase amounted to 3.8%. Though machine sales decreased slightly (-6%), revenues from software and services were excellent. Operating income of PPS before R&D expenditure was Euro 40 million (2001: Euro 39 million). In Wide Format Printing Systems (WFPS) revenues were 6.2% higher, amounting to Euro 223 million. This was mainly due to the acquisition of Gretag Professional Imaging Division (GPID). On an autonomous basis revenues were down by almost 5.5%. Machine sales lagged behind (-22%). Especially in the Technical Document Systems market segment investment decisions are still being postponed. Revenues from software and services increased by more than 12%. The integration of the businesses of the GPID is progressing well. For WFPS the operating income before R&D expenditure amounted to Euro 36 million (2001: Euro 32 million). Balance sheet The increase of Euro 79 million in the balance sheet total compared to the first quarter of 2001 is attributable in full to the capitalisation of goodwill arising upon acquisitions and to the capitalisation of software. Inventories decreased by Euro 44 million and trade accounts receivable (excluding short term lease receivable) decreased by Euro 6 million. In view of the fact that the inventories and receivables of the acquired businesses were included in 2002, this is a good result. Despite the acquisitions during the past year the interest-bearing loans decreased by Euro 21 million compared to the first quarter of the preceding year. Cash flow During the first quarter the cash flow before financing activities (due to the acquisition of GPID) was slightly negative and interest-bearing loans increased by Euro 10 million. Prospects There are still no clear indications of a pick-up in the economy that might lead to a higher volume of orders for new machines. Accordingly, for the first half year a lower result is expected than in the corresponding period of last year, likewise in line with the expectation we published earlier. During the second six months of the year we expect that the result will be higher than in the second half of 2001.

 

 

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