Agfa announces new structure

By Jo Francis, Wednesday 13 March 2019

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Agfa has revamped its divisional structure and created three separate divisions for its print-related activities, as the group seeks more partnerships for future growth.

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The former Agfa Graphics business will have a new shape in 2019

Speaking as Agfa-Gevaert Group announced its year-end results to 31 December 2018, chief executive Christian Reinaudo said the business had made “major steps to transform our group”.

Its Healthcare IT business has been renamed Agfa Healthcare and has been separated from the rest of the group.

The former Agfa Graphics and Speciality Products businesses have been renamed Agfa, which now comprises three divisions: Offset Solutions (the pre-press business); Digital Print & Chemicals (the inkjet business and Specialty Products including synthetic papers); and Radiology Solutions (the imaging activities of the former Healthcare business).

“This simplified divisional structure is technology- and solutions-based and will allow Agfa to seek further partnerships,” the firm stated.

Reinaudo commented: “The idea of the split is to give some independence to the two units to help them develop partnerships and grow independently.”

Agfa Graphics formed a partnership with Chinese manufacturer Lucky HuaGuang Graphics last summer

“As we speak we are talking with Lucky about expansion of the scope of the partnership,” Reinaudo added. “We need to grow and find a way to develop our businesses and the best way we believe is to establish partnerships with other players. Lucky is a typical example and we intend to do more of this.

“The extension of our alliance with Lucky will probably go beyond the borders of Greater China.”

The results reflect a period of substantial change at Agfa-Gevaert Group, including the decision to stop reselling DuPont flexo plates in the US, and the closure of its US plate plant in Branchburg. It also acquired the pre-press business of Spanish manufacturer Ipagsa in September.

Overall sales fell 8% to €2.44bn (£2.1bn), impacted by currency effects and a €60m reduction due to ending the US reseller deal. However, Agfa said that underlying sales were down the equivalent of 3.2% if currency and portfolio rationalisations were excluded. 

EBITDA came in at an 8% margin as forecasted, falling from €222m to €179m. Restructuring costs, which Reinaudo described as an investment in the future of the business, propelled the group to a €15m loss compared with the prior year’s €45m profit.

The Agfa Graphics business posted sales down 12.2% at €1.05bn. Agfa said that excluding the discontinued business in the US, the decline would have been 5.7%.

Gross profit margin slipped from 29.1% to 26.4% due to high aluminium costs and “adverse product and regional mix effects”.

“In the course of 2018, important strategic steps have been taken that should help to restore the prepress segment’s top line and margins” the firm stated.

It reported continued strong volume growth for inks and Reinaudo said the 3.3m-wide Jeti Tauro had been “very well accepted by the market”.

“Significant success with this machine gives some hope that 2019 will be a reasonable year for the inkjet business,” he said.

Reinaudo also said that Agfa-Gevaert is poised to appoint JP Morgan to advise on strategic options for its Healthcare wing.

It has also begun a two-year initiative to “de-risk” its pension liabilities in the UK and US.  

“I cannot commit but I think we are close to the end of decline in the top line of Agfa,” Reinaudo added.

He said the business was further streamlining its operations by simplifying the structure of the group and its processes.

Shares in Agfa-Gevaert rose by 2.87% to €3.73 following the announcement.

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