Agfa-Gevaert today announced its first quarter results.
Compared to the first quarter of 2009, Group revenue increased 0.3 percent (0.7 percent excluding currency effects) to 664 million Euro. This evolution is the mixed result of the recovery of the graphic industry and the revenue performance of Agfa HealthCare.
As a result of the continuous success of the efficiency improvement programs and the increased use of the manufacturing capacity, the Group's recurring gross profit margin improved to 34.5 percent, versus 31.4 percent in the first quarter of 2009 and 32.2 percent in the fourth quarter of 2009.
Following the strong improvement of the last two years, Agfa-Gevaert continued to reduce its Selling and General Administration expenses. SG&A costs were 137 million Euro, which is 4.9 percent lower than in the first quarter of 2009. These expenses represented 20.6 percent of revenue, compared to 21.8 percent last year.
The Group's recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) increased from 55 million Euro in the first quarter of 2009 to 77 million Euro. Recurring EBIT improved strongly from 28 million Euro (4.2 percent of sales) to 53 million Euro (8.0 percent of sales).
Restructuring and non-recurring items resulted in an expense of 2 million Euro, versus an income of 9 million Euro in 2009.The 2009 figures were positively influenced by changes in the defined benefit plans in the USA.
The net finance costs amounted to 23 million Euro, compared to 30 million Euro in the first quarter of 2009.
Income tax expense amounted to 10 million Euro versus 16 million Euro in the first quarter of 2009.
Both Agfa Graphics and Agfa HealthCare posted strong operational performances, resulting in a positive net result of 18 million Euro compared to a net loss of minus 9 million Euro in the first quarter of 2009.
Balance sheet and cash flow
-At the end of March 2010, total assets were 2,978 million Euro, compared to 2,852 million Euro at the end of 2009.
- Inventories were 539 million Euro (or 105 days). Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 473 million Euro, or 64 days and trade payables were 211 million Euro, or 41 days.
- Net financial debt amounted to 434 million Euro, versus 445 million Euro at the end of 2009 and 661 million Euro at the end of the first quarter of 2009.
-Net cash from operating activities amounted to 24 million Euro.
Mainly in the USA and the emerging countries, the graphic markets are recovering from the economic crisis. As a result of this recovery, of Agfa Graphics' growing success in the emerging markets, and of the increased market share for graphic film, the business group's revenue improved by 9.5 percent compared to the first quarter of 2009. Both the Prepress segment and the Industrial Inkjet segment contributed to the top line growth.
Due to the increased use of the manufacturing capacity and the continuous improvement programs, Agfa Graphics' gross profit margin improved from 26.7 percent in the first quarter of 2009 to 30.4 percent. In the past two years, targeted actions resulted in a strong SG&A reduction. In the first quarter of 2010, SG&A expenses stood at 20.3 percent of revenue, versus 21.9 percent in the first quarter of 2009. Recurring EBITDA amounted to 35.1 million Euro (10.2 percent of sales). Recurring EBIT amounted to 24.6 million Euro (7.1 percent of sales), versus 1.2 million Euro (0.4 percent of sales) in the first quarter of 2009, when the crisis in the graphic markets had come to a head.
The most important highlight of the first quarter was the announcement of the new company Agfa Graphics Asia. The joint venture between Agfa Graphics and its business partner Shenzhen Brothers will reinforce both partners' market position in the Greater China and ASEAN region. This strategic alliance fits perfectly in Agfa Graphics' ambitious growth plans for prepress and industrial inkjet in China and the emerging Asian markets. Subject to regulatory approval, the new company is expected to go life no later than the third quarter of 2010.
Also in that region, a major prepress contract was signed with the leading media company Singapore Press Holdings Ltd ( SPH). SPH engaged Agfa Graphics to upgrade its complete prepress process from Computer-to-Film to Computer-to-Plate (CtP) technology. The agreement includes the installation of 10 high-speed platesetters and a two year contract for the supply of :N92v printing plates.
Jiefang Daily Printing Center, located in Shanghai, became the first Chinese newspaper printer to use Agfa Graphics' eco-friendly chemistry-free :N92-VCF printing plates.
Still in prepress, Agfa Graphics introduced the second generation of its :Avalon N8 platesetter family. The new units use far less energy without compromising on performance. Furthermore, the business group introduced a new version of :Apogee Media, its integrated publishing system that combines content creation and management with layout and editorial workflows. :Apogee Media 6.0 allows publishers to efficiently plan, create, edit and control their publications.
In the field of inkjet, Agfa Graphics has included the Jeti industrial printers of the recently acquired Gandi Innovations company in its product offering. Furthermore, a new innovative wide-format printer was introduced. The :Jeti 1224 UV HDC is based on Gandi's printer technology and Agfa Graphics' :Anuvia HD ink technology.
Australia's StylePrint company installed the first :M-Press Tiger industrial flatbed printing press in the Southern hemisphere. Installations at printers in - among other countries - the UK, Canada, the USA and France are scheduled for the near future.
Agfa HealthCare's revenue decreased 5.2 percent compared to the first quarter of 2009. Due to the economic crisis, the seasonal effects in Agfa HealthCare's markets were even more important than usual, which resulted in a very strong end of 2009 and a lower top line in the first quarter of 2010. Although the Imaging segment continued to gain market share, its revenue decreased mainly in Europe and the USA. IT sales remained stable.
As a result of improved service efficiency and the increased use of manufacturing capacity,the business group's gross profit margin improved from 38.5 percent in the first quarter of 2009 to 40.6 percent.
In the past two years, targeted programs resulted in a strong reduction of SG&A expenses. In the first quarter of 2010, Agfa HealthCare succeeded in further reducing these expenses by 10.4 percent compared to the same period in 2009. Agfa HealthCare's recurring EBITDA amounted to 39.8 million Euro (or 14.4 percent of revenue). Recurring EBIT improved to 27.6 million Euro, or 10.0 percent of revenue.
Following the acquisition of the Insight Agents company at the end of 2009, Agfa HealthCare entered the contrast media market in the first quarter. Whereas Insight Agents focussed on Germany, Austria and Switzerland, Agfa HealthCare gradually started expanding the business to additional countries through its extensive distribution networks for medical film.
In the field of imaging, Agfa HealthCare introduced a second digitizer in its series of next generation Computed Radiography systems. The DX-M solution for mammography and all general radiography needs delivers high quality diagnostic images and high throughput. Launched at the end of 2009, the first system in this new series - the DX-G solution for general radiography - was very well received by the market.
Since the introduction of the Direct Radiography portfolio in March 2009, a dozen systems have already been installed. The order entry for these systems is growing in line with expectations.
In Imaging Informatics, Agfa HealthCare took a next step in its ambition to deliver a complete portfolio of diagnostic imaging IT solutions with the launch of its IMPAX for Breast Imaging. The solution extends the business group's IMPAX Picture Archiving and Communication Systems (PACS) technology into Breast Imaging. Furthermore, Agfa HealthCare introduced its IMPAX Nuclear Medicine Information System. Combining the information system with its IMPAX PACS, Agfa HealthCare is now able to offer clinicians a solution which fully automates the nuclear medicine department's workflow.
Still in Imaging Informatics, Agfa HealthCare expanded its agreement with the Basque Healthcare Service's Osakidetza facilities in Spain. Osakidetza will install the IMPAX solution at 15 sites, in addition to the 28 facilities where the solution is already in use. The organization also agreed to install Agfa HealthCare's IMPAX Data Center, which will manage diagnostic image storage and access for all Osakidetza's sites connected to it.
In the field of Enterprise IT, Agfa HealthCare signed an agreement with Montpellier CHRU for the installation of the leading Hospital/Clinical Information System ORBIS across the organisation's seven facilities.
In Germany, Agfa HealthCare signed 28 new customers' agreements for its IT solutions IMPAX, ORBIS and HYDMedia.
Agfa Specialty Products' top line was influenced by the shift of part of its film business to Agfa Graphics and by the market-driven decline for some of the Classic Film products. On the positive side, Printed Circuit Board (PCB) film showed a substantial revenue increase due to the recovery of the electronics industry in Asia. Furthermore, some of the New Business products are starting to generate more sales. It will - however - take a long time before they are able to compensate for the decline of the traditional products. As a result of these elements, revenue decreased by 23.2 percent compared to the first quarter of 2009.
Agfa Specialty Products' profitability was affected by the above-mentioned revenue decline and by the continued investments in the New Business products. However, due to the upturn of the profitable PCB film business and the continued efforts to reduce operational costs, the recurring EBITDA margin improved to 7.7 percent of revenue and the recurring EBIT margin to 5.3 percent of revenue.