Agfa-Gevaert to split into three independent, listed companies, representing the activities of Agfa Graphics, Agfa HealthCare and Agfa Materials by the end of 2007
Agfa-Gevaert announced today that its Board of Directors has completed the strategic review of the company and decided that it is in the best interest of the Group, the customers, the shareholders and the employees to split into three independent, listed companies - representing the activities of Agfa Graphics, Agfa HealthCare and Agfa Materials - by the end of 2007. The Group’s gross profit margin remained virtually unchanged at 37 per cent compared to the fourth quarter of 2005. Improved pricing and production and service efficiencies were able to offset the significant increases in silver and aluminium costs, which were €34m higher than in the fourth quarter of 2005.
Sales and general administration costs (excluding non-recurring items) increased from €207m in the fourth quarter of 2005 to €218m, mainly
because of the investments in the international roll-out of HealthCare’s ORBIS solutions. Measures to bring down the overall SG&A costs in the Group are being implemented as part of Agfa’s global plan to take out approximately €250m of annual costs by 2008.
R&D expenses increased 4.2 per cent to €50m, driven by continued investments in Graphics’ industrial inkjet printing and HealthCare’s IT and software
solutions.
Recurring EBIT decreased 7 per cent to €80m, or 8.6 per cent of sales. Restructuring and non-recurring items amounted to €122 m, as the Group
started to implement its plan to reduce costs annually by €250m by 2008, making almost 2000 functions worldwide redundant.
Approximately €160 million of the estimated total restructuring costs of €250m related to the savings plan has already been provided for. The remaining part will be spread over 2007 and 2008. The project is on track and the negotiations with the social partners have been finalised in all major countries concerned. The first effects of the measures taken to reduce costs will become visible in 2007.
The non-operating result amounted to (€15m). The net loss amounted to €25m versus a profit of €38m in the last quarter of 2005.
Graphics’ recurring EBIT increased almost 20 per cent to €17.7m, or 4.0 per cent of sales. The profitability of the prepress solutions improved considerably due to the price increases, the favourable mix effects related to the shift to digital printing plate solutions and increased production efficiencies.
The significant start-up losses of the inkjet business, on the other hand, had an adverse effect on Graphics’ margins.
In the fourth quarter, Xaar, the world’s leading independent supplier of industrial inkjet printheads, inks and equipment, approved one of Agfa’s UV-curable inks for use with its innovative OmniDot 760 printhead. The printhead was co-developed by Agfa and Xaar and is also used in Agfa’s :M-Press high-speed inkjet press.
An important ink contract has also been signed with the Korean printer manufacturer Digital Graphics Incorporation.
Mondi Packaging Flexibles (Korneuburg, Austria) installed Graphics’ :Dotrix digital inkjet press for the quick and cost-effective production of packaging prototypes and small printing series on a wide variety of substrates. To date, Graphics has installed 18 :Dotrix printers at customers around the world and has a strong order book both for the :M-Press and :Dotrix.
Graphics continued to expand its comprehensive prepress portfolio, offering additional options to further improve productivity and flexibility to newspaper, packaging and commercial printers. For the newspaper segment, Agfa Graphics increased the throughput of its :Advantage DL platesetter to 220 printing plates an hour, allowing printers to efficiently handle very busy periods in production.
The business group also launched an update of its image processing software for newspapers using Mac systems as well as a completely new version
for newspapers using PC platforms.
Graphics closed a number of new contracts for its computer-to-plate (CTP) systems with important newspaper printers, strengthening its position as global leader in the newspaper prepress segment. Australia’s Nationwide News went completely digital with Agfa to produce the best-selling newspapers in Australia, including The Daily Telegraph and The Australian.
In the US, Post-Newsweek Media purchased three :Advantage platesetters with :Arkitex software and South Carolina Newspapers selected Agfa Graphics’ CtP solution for its new production center. Graphics’ chemistry-free :Azura printing plate, with Thermofuse technology, is now being used by more than
one thousand commercial printers worldwide. Thermofuse is now one of the world’s most popular CtP processing technologies.
From a business perspective, Graphics expects industrial inkjet to break through in 2007, with increasing sales and the elimination of the start-up losses in the course of the second half of the year. In prepress, stable sales are anticipated, with the continuing decline of analog products being compensated by the growth of the more profitable digital printing plates.
