Agfa reports earnings, Graphics group reports solid results
Press release from the issuing company
3/2/07 -- Agfa-Gevaert today also announced its fourth quarter results. Excluding currency effects, Group sales increased 3.9 percent (1.5 percent including currency effects) compared to the fourth quarter of 2005. The Group's fourth quarter recurring EBIT decreased due to the significant increase of silver and aluminium costs. Agfa also booked a restructuring charge of 122 million Euro in the fourth quarter, as the negotiations about the social plans for, amongst others, the Belgian operations were concluded. As a result, a net loss of 25 million Euro was recorded in the last quarter.
Marc Olivié, Agfa's President and CEO, stated: "All our business groups are on track with the implementation of their growth strategies, but high raw material costs continued to have a major impact on our results. Graphics was able to improve its profitability thanks to its successful pricing strategy and the shift to more profitable digital prepress solutions. HealthCare's encouraging sales growth in state-of-the-art digital and IT solutions again more than compensated the decline in the analog film and print products. Specialty Products' sales grew strongly throughout the year and the business group is developing new products for its growth markets."
Balance sheet and cash flow
- At the end of December 2006, total assets were 3,832 million Euro, compared to 3,982 million Euro at the end of 2005.
- Days of inventories amounted to 107 at the end of December 2006, down 11 days compared to September 2006, but up 6 days versus the end of December 2005. Days of trade receivables were 86, virtually unchanged from 2005. Trade payables increased to 69 days, significantly better than the target of 55 days.
- Net financial debt decreased by 22 million Euro over the quarter to 704 million Euro at the end of December.
- Net operating cash flow amounted to minus 6 million Euro in the fourth quarter. It was influenced by a significant one-off tax payment and by the increased cash usage for trade receivables related to the sales peak at year-end. For the full year, Agfa generated a strong net operating cash flow of 107 million Euro.
THE GRAPHICS DIVISION
In the beginning of 2006, certain niche products, such as film for Identification and Security, Aerial Photography, Phototooling and Advanced Materials were transferred from Graphics to Specialty Products. Sales amounted to 444 million Euro. On a comparable basis and at stable exchange rates, this is an increase of 0.9 percent (a decrease of 2.4 percent including exchange rate effects). This sales performance was driven by the price increases implemented to offset higher raw material costs and the continued strong growth of digital printing plates.
The recurring EBITDA-margin amounted to 7.6 percent of sales, virtually unchanged from last year. Graphics' recurring EBIT increased almost 20 percent to 17.7 million Euro, or 4.0 percent of sales. The profitability of the prepress solutions improved considerably due to the price increases, the favorable mix effects related to the shift to digital printing plate solutions and increased production efficiencies. The significant start-up losses of the inkjet business, on the other hand, had an adverse effect on Graphics' margins.
In the fourth quarter, Xaar, the world's leading independent supplier of industrial inkjet printheads, inks and equipment, approved one of Agfa's UV-curable inks for use with its innovative OmniDot 760 printhead. The printhead was co-developed by Agfa and Xaar and is also used in Agfa's :M-Press high-speed inkjet press. An important ink contract has also been signed with the Korean printer manufacturer Digital Graphics Incorporation. Mondi Packaging Flexibles (Korneuburg, Austria) installed Graphics' :Dotrix digital inkjet press for the quick and cost-effective production of packaging prototypes and small printing series on a wide variety of substrates. To date, Graphics has installed 18 :Dotrix printers at customers around the world and has a strong order book both for the :M-Press and :Dotrix.
Furthermore, Graphics continued to expand its comprehensive prepress portfolio, offering additional options to further improve productivity and flexibility to newspaper, packaging and commercial printers. For the newspaper segment, Agfa Graphics increased the throughput of its :Advantage DL platesetter to 220 printing plates an hour, allowing printers to efficiently handle very busy periods in production. The business group also launched an update of its image processing software for newspapers using Mac systems as well as a completely new version for newspapers using PC platforms.
Graphics closed a number of new contracts for its computer-to-plate (CtP) systems with important newspaper printers, strengthening its position as global leader in the newspaper prepress segment. Nationwide News went completely digital with Agfa to produce the best-selling newspapers in Australia, including The Daily Telegraph and The Australian. In the US, Post-Newsweek Media purchased three :Advantage platesetters with :Arkitex software and South Carolina Newspapers selected Agfa Graphics' CtP solution for its new production center. Graphics' chemistry-free :Azura printing plate, with Thermofuse technology, is now being used by more than one thousand commercial printers worldwide. Thermofuse is now one of the world's most popular CtP processing technologies.
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