Agfa-Gevaert Publishes Full Year 2014 Results

Agfa-Gevaert announced its full year 2014 results. The Agfa-Gevaert Group’s revenue declined by 8.6% to $2.62 billion compared to the previous year. The pace of the top line drop slowed down quarter after quarter due to targeted programs to support the growth engines of the business groups on the one hand and the gradually improving exchange rate situation on the other hand. Excluding currency effects, the revenue decrease amounted to 7.5%.
 
“In 2014, our activities continued to be challenged by the global economic situation and the unstable political situation in certain regions,” said Christian Reinaudo, president and CEO of the Agfa-Gevaert Group. “I am proud to say that we have been able to improve the efficiency of our operations in spite of these tough conditions. I see four major achievements. First of all, we have generated a strong net operating cash flow. This allowed us to reduce the net financial debt to a very decent level. Furthermore, our dedicated efficiency programs and positive raw material effects resulted in a significant improvement of our gross margin. Thirdly, we have been able to keep the restructuring costs and the operational costs under control. All that allowed us to book a positive net result for the second year in a row. And last but not least, I would like to mention the success of our efforts to refinance the company.
 
In 2015, one of our key targets is to stop the erosion of the top line. We will therefore further strengthen our focus on our organic growth initiatives. I am confident that our efforts in this field will start to bear fruit. Our financial debt situation also allows us to look into external growth opportunities, should they occur. Our second main target for 2015 is to deliver a recurring EBITDA percentage close to 10% of revenue,” said Reinaudo.
 
The Group’s top line suffered from the continuous decline of the traditional film businesses, the product portfolio rationalization, the overall economic weakness and the unstable political situation in certain regions. The uncertain investment climate in the radiology segment of the US healthcare sector weighed on the Agfa HealthCare business group’s revenue.
 
The Group’s gross profit margin reached 30.8% of revenue. This significant improvement is contributable to the success of the targeted efficiency programs and positive raw material effects.
 
Net profit improved by 20.4% to €59 million. In spite of the economic headwinds, the Group succeeded in booking a positive net result for the second consecutive year. At the end of the year, total assets were €2,548 million, compared to €2,568 million at the end of 2013. Net financial debt decreased to €126 million, versus €217 million at the end of 2013.
 
Agfa Graphics’ revenue decreased by 9.1% to €1,355 million. Excluding currency related effects, the decline amounted to 8.8%. The top line evolution reflects the overall economic weakness and the measures to rationalize the product portfolio. In the prepress segment, the analog business continued to decline strongly, while the digital computer-to-plate (CtP) business suffered from competitive pressure. Towards the end of the year, the inkjet segment’s top line started to recover from the effects of the weak global economy.
 
Due to the success of targeted projects to improve efficiency on the one hand and positive raw material effects on the other hand, Agfa Graphics’ gross profit margin improved substantially from 26.2% in 2013 to 28.3%. Recurring EBITDA reached 100.4 million Euro (7.4% of revenue). Recurring EBIT increased by over 15% to 70.0 million Euro (5.2% of revenue).
 
Heavily influenced by adverse currency effects in the first quarters of the year, Agfa HealthCare’s revenue decreased by 7.8% to €1,069 million. On a currency comparable basis, the decrease amounted to 5.6%. The business group’s top line was impacted by the economic weakness in most of the emerging markets and by the continuous revenue decline of the Imaging segment’s traditional film products.
 
In the Imaging segment’s digital radiography business (consisting of Computed Radiography, Direct Radiography and the hardcopy business), sales of the DR product range grew strongly. The IT segment’s radiology IT solutions suffered from the changing market conditions in the US, where the government is inciting hospitals to invest in Electronic Medical Records (EMR), rather than departmental IT. Agfa HealthCare responds to these changing conditions with solutions that enrich the EMR with documents and medical images. This strategy started to bear fruit towards the end of the year.
 
Agfa HealthCare’s gross profit margin grew from 34.9% of revenue in 2013 to 36.6%.
 
The Agfa-Gevaert Group’s fourth quarter revenue declined by 3.8% to €711 million. This clear improvement versus the previous quarters of the year is due to targeted programs to support the growth engines of the business groups on the one hand and the evolution of the Euro exchange rate on the other hand. However, the Group’s top line continued to suffer from the overall economic weakness, the unstable political situation in certain regions and the uncertain investment climate in the US healthcare sector.
 
In December, Agfa Graphics’ low-migration UV-curable inkjet inks were honored with the prestigious ‘essenscia Innovation Award 2014’. Essenscia is the Belgian Federation for the Chemical Industry and Life Sciences. As the inks cure very quickly, they do not contaminate the contents of the packaging. This makes them ideal for printing directly on food packaging.