Agfa Q1 results hit by strong euro

Richard Stuart-Turner
Tuesday, May 8, 2018

Agfa has reported declines in both its revenue and gross profit in the first quarter of 2018.

The Belgian manufacturer recorded sales of €549m (£483m) in the period, down 6.7% on Q1 2017, while its gross profit dropped by 7.5% to €178m. The group’s gross profit margin dipped slightly to 32.4%, from 32.7% in Q1 2017.

Group recurring EBITDA was down by 3.5% to €37m but represented 6.8% of revenue, up from 6.6% in Q1 2017.

Agfa attributed its top-line decrease to the strength of the euro versus other currencies. It said its revenue decline was limited to 1.3% when excluding these currency effects.

By division, Agfa Graphics’ revenue fell by 13.7% in Q1 to €259m, while sales in the Healthcare division dropped by 0.1% to €239m, with recurring EBITDA up by 42.1% to €23.2m.

The Specialty Products unit, which develops items such as printed circuit boards and synthetic paper, grew by 4.1% to €51m, with EBITDA up by 93% to €6.7m.

Agfa Graphics’ top line was impacted by the previously announced product portfolio reorganisation in pre-press and the market-driven decline for analogue computer-to-film products, the group said.

New Q1 product launches in the Graphics business included the Anapurna H1650i wide-format hybrid printer, Fortuna 11 – the latest version of Agfa’s security printing software, and the Adamas eco-friendly plate.

The group’s net financial debt amounted to €19m at the end of Q1, versus €18m at the end of 2017.

Christian Reinaudo, president and chief executive of the Agfa-Gevaert Group, said: “Our first-quarter results are inline with our expectations. As anticipated, strong currency effects and the decision to rationalise Agfa Graphics’ pre-press portfolio weighed on our top line.

“These elements somewhat overshadowed the good performances of the Agfa HealthCare and Agfa Specialty Products business groups. We still do not expect our full year recurring EBITDA margin to be above the margin reached in 2017.

“However, we stick to our ambition to target a recurring EBITDA margin of around 10% of revenue on average in the years to come.”

Agfa UK managing director Eddie Williams told PrintWeek the UK and Ireland had "a good first quarter".

“It's still tough in terms of price pressure - aluminium is continuing to stay at a high level and increased again last month,” he said.

“But we've had three significant wins from a newspaper contract point of view, which has been a real positive in terms of volume. And we're seeing a few successes in our cloud technology, we're seeing quite an appetite from our larger customers to move their software and storage into the cloud.”

Agfa-Gevaert’s share price jumped by 5% to €3.13 on the publication of the results this morning (8 May) but has since settled down to €3.05 at the time of writing.

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