AGFA Profits Down, Graphic Systems Business Earnings Down 14%
Press release from the issuing company
Mortsel, 23 August 2001 - Agfa-Gevaert achieved a turnover of 2,473 million euros for the first half of 2001, 5.5 percent lower than in the same period in 2000 (2,616 million euros). Despite further deterioration in the economic outlook, group turnover rose to 1,291 million euros in the second quarter, which equates to an increase of 9.2 percent over the first quarter, all Business Segments having contributed to this performance.
With a turnover of 646 million euros, sales of 'New Digital Solutions' again showed a substantial rise of 26 percent for ongoing businesses in the first half of 2001 over the same period in the previous year. As a result the digital share of group turnover is now 26 percent, against 21 percent last year.
EBIT (operating result before restructuring and non-recurring results) for the group in the first half of 2001 amounted to 159 million euros which is 39.5 percent less than in the first half of 2000 (263 million euros). This is due primarily to a drop in turnover, higher exceptional charges as well as production and administration costs which rose more rapidly than expected. Return on turnover reached 6.4 percent, against 10 percent last year.
At 55 million euros, profit before tax for the first six months was 56 percent below the figure for the same period last year. After deduction of taxes and Agfa's share of the Xeikon losses (-7 million euros), net profit amounted to 31 million euros (against 80 million euros last year).
The Technical Imaging share of group turnover rose from 31.1 to 36.2 percent relative to the first half of 2000. The Graphic Systems share is now 39.1 percent (39.6 percent last year) and that of Consumer Imaging 24.7 percent (29.3 percent last year).
The Graphic Systems Business Segment, incorporating the Electronic Prepress, Photographic Prepress and Offset Printing Systems Business Units, posted a turnover of 967 million euros in the first half of 2001. This represents a 3.7 percent drop compared with the first half of 2000, excluding DPS (Digital Printing Systems - sold to Xeikon in 2000). The drop in turnover including DPS was 6.7 percent. EBIT amounted to 55 million euros (64 million euros last year, including DPS), some 14 percent less than the first half of last year.
Turnover rose during the second quarter by 5.3 percent compared with the first quarter to 496 million euros (last year: 471 million euros). All Business Units contributed to this increase, but it is attributable primarily to an increase in the volume of sales of digital printing plates and CtP equipment. This also enabled Agfa to increase its share of the CtP market.
In May Agfa announced that it had entered into an important contract with The Wall Street Journal Europe. Agfa's IntelliNet workflow system will provide a direct link between the editing of the newspaper in Brussels and the printers in Belgium, Germany, the UK, Switzerland and Italy.
Turnover in the Technical Imaging Business Segment, dominated by the Healthcare (formerly known as Medical Imaging) and Non-Destructive Testing (NDT) Business Groups, increased by 10 percent to 894 million euros for the first half of 2001. EBIT was down by 23.5 percent compared with the outstanding first half of 2000 and now amounts to 104 million euros.
Turnover for Healthcare was up in the first six months, mainly due to the increased demand for hard copy products and IMPAX networks. Agfa recently secured a substantial contract, among others, with a hospital complex in Offenbach, Germany, which Agfa is to equip with a digital "Agfa IMPAX" network and a number of other digital systems.
EBIT was adversely affected in the first half of this year by increased investment in Research and Development, increased production and sales costs and by the application of changed bookkeeping rules concerning the time at which revenues can be booked.
NDT turnover grew very sharply in the first half of 2001 compared with the first half of 2000. This growth is mainly attributable to the effects of the Krautkramer takeover. The NDT film operations also posted a 9 percent increase in turnover.
In the real time imaging market, Agfa's NDT Business Group signed a declaration of intent in the second quarter to acquire Pantak, Inc., the market leader in the US for high-value industrial X-ray equipment and systems. As with the planned acquisition of Seifert, the European market leader in the same market sector, the Pantak acquisition will be completed in the near future.
Consumer Imaging incorporates the Film, Finishing (photographic paper and chemicals), Laboratory Equipment and Consumer Digital Imaging (CDI: digital cameras and scanners) Business Units. Due, among other factors, to the economic slowdown in the first half of this year, this Business Segment recorded a turnover of 612 million euros, a drop of 20 percent against the same period last year.
Especially the CDI and Laboratory Equipment Business Units experienced a sharp reversal. In Laboratory Equipment this was due to the fact that the 'Agfa d-lab.3' digital minilab, for which there is substantial demand, was not delivered until April 2001. In the field of high-speed photographic printers (Wholesale Finishing), turnover was expected to fall compared with the first half of 2000, a period in which exceptional numbers of DIMAX photographic printers were sold.
The sharp drop in turnover reduced EBIT to zero (last year: 63 million euros) for the first half of 2001. However, a positive EBIT of 8.7 million euros was posted in the second quarter, with turnover amounting to 341 million euros, an increase of 26 percent over the first quarter. This improvement is due to seasonal factors, as well as the introduction of digital minilabs to the market as from April this year.
In the first six months of 2001 Europe accounted for 51.3 percent of group turnover (49.9 percent last year). The NAFTA (USA, Canada and Mexico) region's share is now 27.7 percent (28.8 percent last year). Turnover in the Asia/Oceania and Africa region dropped by 7 percent so that the region now has a share of 16.4 percent. The Latin American region, with a drop in turnover of 4 percent, stood once again at 4.6 percent of group turnover.
In the light of the results of the first half of the year and of the still lacklustre economic prospects, Agfa expects that the turnover for the whole of the year 2001 will be down by about 4 percent from the year before, while EBIT before restructuring could decrease by approximately 35 percent.
It is our objective to restore our profitability as from 2002. In this regard, Ludo Verhoeven, CEO and chairman of the Board of Directors announced the Horizon Plan on 27 June this year. Although this plan, which will not be set out in full until the end of September, will probably entail additional provisions, it is premature at this time to put forward a more precise forecast for net profit.
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