Agfa mulls future options for offset business
Thursday, March 11, 2021
Agfa boss Pascal Juery is “ready to contemplate” some sort of sale or merger of the group’s offset business in the face of overcapacity, a declining market and the price pressures that are affecting the group and its rivals.
Juery took over as CEO in February 2020, just as the seriousness of the Covid-19 situation became apparent across global markets.
Three months ago Agfa announced a restructure at its Offset Solutions business that would result in the operation being made a separate legal entity.
The group did a similar thing with its Healthcare IT business in 2019, and then sold the operation just over a year afterwards.
Speaking yesterday as the Belgium-headquartered manufacturer announced its results for 2020, Juery commented on the decision to separate the business unit, and said: “It means we are ready to look at potential strategic options.
“I sincerely believe that in a declining market as we see it today there is a need for industry recombination of some kind. We believe that we are one of the few players in the market and we are ready to contemplate it. But it is too soon to comment further.”
Offset Solutions is Agfa’s biggest business division, accounting for 41% of overall group sales, which were €1.709bn in 2020, down 13.5% on the prior year. Adjusted EBITDA fell by 35.7% to €153m.
Sales at Offset Solutions fell by 16.5% to €704m, and it swung to a €2.6m EBITDA loss (2019 profit: €27.9m). The group said that its performance improved in Q4, with sales recovering from the second half.
The division’s products include printing plates, CTP systems, pressroom supplies, film, proofing media and workflow software.
Inkjet products are in a separate business unit.
As part of the previously-announced restructuring Agfa had announced plans to streamline the Offset Solutions product range, and has already closed two plate plant including the Leeds facility in the UK.
In the announcement the group stated that it believed “current pricing levels in the [printing] industry are not sustainable”, and it is looking at ways it can adapt its pricing model for certain services it provides to customers.
Regarding pricing and the situation for competitor manufacturers, Juery commented: “Yes there is overcapacity but it’s also an industry where today the whole industry is in the red. So we have no choice. It’s the same for all the players in the market.
“Nobody is making money in this market. We have to do it and will do it.”
He said that pressure on raw materials and shipping costs had increased in recent months.
Agfa also believes that demand for offset printing products “is not expected to fully recover” from the impact of Covid-19, unlike other parts of the group’s operations that are forecast to fully recover from pandemic-related disruption in the medium-term, while “some would even benefit from post-Covid opportunities”.
Agfa shares rose from €3.70 to €4.02 after the announcement, and were at a 52-week high of €4.12 at the time of writing (low: €2.90).
In the Digital Print & Chemicals division, which includes Agfa’s wide-format inkjet printing business, sales for 2020 were down 18.6% at €289m, while adjusted EBITDA fell by 44.3% to €18.8m.
Agfa said its ink products for sign and display markets “continued to perform well”, while inks for industrial printing applications “grew sequentially”. The group has high hopes for its just-launched high-end Jeti Tauro wide-format printer, and is also developing new products for growth areas such as packaging.
In Q4 2020 it also launched its InterioJet water-based inkjet system for the interior décor market.
The retained Healthcare IT imaging business continues to be a key business for the group. Sales were down 4.6% at €230m. Radiology Solutions sales were down 9.4% at €485m.
Agfa also announced a share buyback program alongside its results, with a volume of up to €50m.
“The program allows shareholders to benefit from the sale of part of the Healthcare IT activities and shows the group’s confidence in its ongoing transformation process,” it stated.