Agfa's offset wing back in the black, Ipagsa to shut
Wednesday, August 25, 2021
Agfa’s Offset Solutions business is back in the black in Q2, with sales up 20% and a near-€11m (£9.4m) improvement in EBITDA compared to last year – but a fresh restructure will involve the closure of its Ipagsa operation in Spain.
Offset Solutions is Agfa’s biggest division and the subject of considerable scrutiny about its future, with moves in progress to turn it into a separate business and CEO Pascal Juery contemplating possible options including a sale or merger of the operation.
“We are making progress in setting up the business as a standalone as announced earlier this year,” Juery noted.
Sales at the division were up 20.1% year-on-year in the three months to 30 June at €183m, excluding currency.
Adjusted EBITA for Q2 was €8m, a massive turnaround on the prior year’s €2.8m loss for the quarter.
In Q2 2019, pre-pandemic, offset sales were €207m with adjusted EBITDA of €8.4m.
“We have taken a lot of actions to restore the profitability of this business – cost actions and reviewing our revenue model,” Juery said.
He said Offset Solutions was “most impacted” by cost inflation across the group
As part of its ongoing review of businesses and profit improvement plan Agfa has announced that it plans to shut down Spanish plates and CTP business Ipagsa, which it acquired just three years ago to add a lower-cost offering for “price sensitive markets”.
“We had a kind of tier two approach in terms of digital plates for offset with our subsidiary in Spain. We have decided to wind down this activity over the next six months and reintegrate it back into Agfa with a tier one approach,” Juery said.
The group expects input cost pressures, particularly for aluminium and freight, to impact profitability in its second-half results.
He said actions taken, including cost increases and surcharges, had not resulted in the loss of a material amount of plate volumes.
The Digital Print & Chemicals division, which includes Agfa’s inkjet business, “made very good progress”.
“Digital printing has some momentum and customers are back and printing,” he said, even though some capex spend has been delayed.
The launch of the new Jeti Tauro high-speed wide-format printer was described as a success that had “exceeded expectations”.
“It’s an extremely good sign of the health of the business. Décor and laminate flooring are ramping up, and at the same time we are looking at new applications for the Jeti Tauro in packaging – an area that is very promising,” Juery stated.
Sales at the division, which includes film and foil and speciality chemicals, were up 23.3% at €81m, while adjusted EBITDA was up 88% at €6.8m.
Healthcare IT sales were down 6.8% at €56m with adjusted EBITDA down 24.4% at €7.9m. Agfa said the prior year results had been boosted by a very large project in North America.
Radiology Solutions posted sales up 9.7% at €121m, with adjusted EBITDA down 11.7% at €21m.
Agfa also completed the €350m pension “de-risking” programme it began last year during the quarter. This included a total of €170m for a buy-in insurance policy for a group of UK pensioners whereby the risk of insufficient funds was removed in return for a premium paid at the start of the policy.
For the half year, overall sales and adjusted EBITDA were flat at €836m and €56m.
Regarding the outlook for the second-half, Juery commented: “We do expect a continued recovery for the rest of the year, that’s pretty clear – across the board we are seeing positive momentum.
“Overall we will continue to take price action and we will continue to manage our costs responsibly.”