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Agfa doubles profit with increased IT component in graphic sales

Friday, 30 August 2002
By Print 21 Online Article

Reporting half year results after discontinuing the production of scanners and digital cameras from January 2002, Agfa posted a solid result mainly because of its Horizion plan to cut costs and eliminate inefficiencies.

Graphic Systems’ sales decreased to Aud$1.6 billion (Euro 931 million) which, the company claims, illustrates that market conditions in the graphic industry are still weak. As a result of the continuing shift from Computer-to-Film to Computer-to-Plate, turnover in digital plates again showed considerable growth.

Another market trend is that the IT content of the solutions offered to the printing industry is further increasing. This enabled Agfa to upgrade its Apogee X workflow software and to make it available for the packaging industry. Web-based project management software Delano was launched and Quebecor, the world’s largest printer ordered it for several of its plants.

Graphic Systems’ operating result before restructuring increased by 36.4 percent and now amount to $133 million (Euro 75.0 million). Return on sales reached 8.1 percent, compared to 5.7 percent in the first half of 2001.

Overall, after two quarters in 2002, Agfa’s sales reached $4,2 billion (Euro 2.3billion). The Group’s operating result before restructuring and net nonrecurring expenses increased 51 percent compared to the same period of 2001 – net profit nearly doubled to $105 million (Euro 59 million).

Turnover decreased 3.8 percent compared to the first half of 2001. However, excluding the sales of digital cameras and scanners (discontinued as from the beginning of 2002), the decrease was limited to 1.4 percent and can largely be explained by the ongoing weakness in the overall economy. Sales of the New digital solutions continued to show strong growth (plus 28.1 percent) and now account for 34.8 percent of Group sales (previous year: 26.1 percent).

As the beneficial effects of the Horizon restructuring plan increased, the results of the second quarter exceeded those of the first three months of the year.

Outlook

As further dollar weakness would affect turnover and as there are no signs yet of a sustained pickup of economic growth, Agfa does not expect its sales to improve substantially in the months to come. On the other hand, the Group will continue to reap the benefits of the Horizon Plan, which should lead to a further improvement of the results during the second half of the year. The operating result before restructuring charges for the second half should therefore exceed that of the first six months by at least 10 percent, while net profit should be 50 percent higher.

The net result of 2003 should show further progress as additional savings will occur in the Horizon plan.

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