Agfa-Gevaert N.V (Agfa-Gevaert), a Belgium-based medical devices company, has reported the net sales of EUR662 million for the first quarter of 2009, down 12.1%, compared to the net sales of EUR753 million in the year-ago quarter. It has also reported net loss of EUR9 million, or EUR0.07 per share, for the first quarter of 2009, compared with the net profit of EUR10 million, or EUR0.08 per share, in the year-ago quarter.
Economic slowdown affects businesses, mainly in Agfa Graphics and Agfa Specialty Products
Good performance of Agfa HealthCare
Further improvement of SG&A costs
Recurring EBIT at EUR28 million versus EUR40 million in first quarter
Further execution of net financial debt reduction program – Net financial debt further improved from EUR703 million in the first quarter of 2008 to EUR661 million.
The sales decrease affected the Group’s manufacturing efficiency due to lower use of capacity. As a result, the Group’s recurring gross profit margin decreased from 34% in the first quarter of 2008 to 31.4%.
Continuing the efforts of last year, Agfa-Gevaert further reduced its Selling and General Administration costs in the first months of 2009. The SG&A monthly runrate was brought down from EUR54 million Euro in 2008 to 48 million Euro in the first quarter of 2009. Compared to the first quarter of 2008, these costs decreased by EUR22 million. The SG&A expenses represented 21.8% of sales. The Group has taken a number of additional measures to further lower its costs in all business groups.
The Group’s recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) decreased from EUR71 million in the first quarter of 2008 to EUR55 million. Recurring EBIT decreased from EUR40 million to EUR28 million.
An adjustment to the benefit plans in the US more than offset the normal restructuring and non-recurring items, resulting in an income of EUR9 million, versus an expense of EUR5 million in the first quarter of 2008.
The non-operating result was more negative than in 2008 due to a special pension charge (mainly concerning inactives), as mentioned during the fourth quarter 2008 communication. The non-operating result amounted to minus EUR30 million.
The Group’s tax costs were higher than in 2008, mainly because of deferred tax charges.
Balance sheet and cash flow
At the end of March 2009, total assets were EUR3,133 million, compared to EUR3,160 million at the end of 2008.
Inventories were EUR591 million (or 105 days). Trade receivables (including deferred revenue and advanced payments) amounted to EUR577 million, or 78 days and trade payables were EUR212 million, or 38 days.
As a result of targeted measures, net financial debt further improved to EUR661 million at the end of March 2009, compared to EUR673 million at the end of 2008, and EUR703 million at the end of March 2008.
Net operating cash flow amounted to EUR26 million.
Agfa HealthCare performed in line with earlier expressed expectations, in spite of the economic crisis. The business group’s sales decreased by only 1.0% to 291 million Euro. The markets for X-ray film and hardcopy film evolved in line with
the trend of the previous quarters. Due to the crisis, some care organizations are postponing their investments in Computed Radiography (CR) equipment. Despite the weak economic conditions, Imaging IT and Enterprise IT performed markedly better than in the first months of 2008.
Agfa HealthCare’s consumable margins suffered from production inefficiencies due to the lower use of the Group’s production capacity. As planned, Agfa HealthCare further reduced its SG&A expenses by EUR10 million compared to the first quarter of 2008. As a result, recurring EBITDA amounted to EUR39.0 million (or 13.4% of sales). Recurring EBIT improved by 51.8% to EUR25.5 million, or 8.8% of sales.
Agfa HealthCare took an important step in its strategy to strengthen the imaging segment with new solutions. At the European Congress of Radiology (Vienna, Austria), the business group showcased its new DX-D line of Direct Radiography (DR) solutions. These solutions are complementary to Agfa HealthCare’s leading range of CR systems. Today, Agfa HealthCare is able to offer every healthcare facility of any size the right radiography solution.
In the first quarter, Agfa HealthCare again signed a number of important contracts for its IMPAX 6 PACS (Picture Archiving and Communication System). ENELMED, a leading private healthcare provider in Poland, selected IMPAX to serve the needs of its 7 medical centers. The organization also ordered 8 CR systems and 7 hardcopy printers. The Bulgarian Ministry of Health selected Agfa HealthCare for the integration of diagnostic imaging at four leading hospitals.
In Canada, the government of the Northwest Territories selected IMPAX to connect the four main hospitals in the region. In a later stage, 18 community health centers will also be connected to the network. Beaumont Hospitals (Royal Oak, Michigan, USA) will expand its IMPAX PACS to include IMPAX Cardiovascular. After the completion of the project, the hospital group will be one of Agfa HealthCare’s largest integrated cardiology-radiology PACS implementations in North America. Still in the USA, Agfa HealthCare’s latest solution, IMPAX Data Center, was deployed successfully across the 7 hospitals and the 35 health clinics of Oschner Health System of New Orleans, Louisiana, allowing any clinician easy access to imaging data, regardless of its originating department or hospital facility.
In Enterprise IT, a number of important contracts were signed in several countries which Agfa HealthCare is targeting with its ORBIS solution. The focus is currently on Germany, Austria, Switzerland, France, Belgium and Luxembourg.