· Top line decline of 4.8%, excluding currency effects and the impact of portfolio rationalizations
· Strong performance of Inkjet, HealthCare Information Solutions and certain Specialty Products ranges
· Recurring EBITDA at 35 million Euro
· Net loss at minus 5 million Euro
· Net financial debt at 99 million Euro
Agfa-Gevaert today announced its third quarter 2018 results.
"During this quarter, we continued to make excellent progress with the reorganization of our HealthCare IT activities into a stand-alone legal entity structure within the Group. The technical part of this complex exercise is almost behind us. We have also been focusing on clarifying the strategies of the future HealthCare IT company, as well as of the other activities of the Group. As already stated before, we aim at playing an important role in the consolidation of the offset industry. This strategy has translated into concrete actions in the past quarter. We entered into an alliance with the Chinese Lucky HuaGuang Graphics Co. Ltd., which will have far-reaching consequences for our business and for the prepress industry. Furthermore, we announced our intention to acquire the prepress business of the Spanish Ipagsa company. Finally, in order to optimize production capacity, we recently announced the intended closure of our printing plate factory in Branchburg.
I am confident that when the project is completed, two companies will emerge that will have the power and the means to pursue growth in the years to come. We will give more information on how we see the companies' structures and strategies when we report on our full year results.
The strong third quarter performance of most of our growth engines was snowed under by the top line decrease of most of our traditional businesses. As expected, the top line of Agfa Graphics' prepress business was impacted by the product portfolio reorganization. In Agfa HealthCare, the hardcopy business temporarily slowed down following a marked recovery in the first half of the year. However, we are confident that this business will pick up again in the coming quarters.
Our full year recurring EBITDA margin will be around 8% of revenue. Mainly based on our current actions in the field of the prepress and HealthCare IT businesses, we stick to our ambition to target a recurring EBITDA margin of around 10% of revenue on average in the years to come," said Christian Reinaudo, President and CEO of the Agfa-Gevaert Group.
The Agfa-Gevaert Group's top line evolution was strongly impacted by the product portfolio reorganization in the Agfa Graphics business group's prepress business.
Excluding portfolio rationalizations and currency effects, the Agfa-Gevaert Group's revenue decline amounted to 4.8%. Several growth engines - including Agfa Graphics' inkjet business, Agfa HealthCare's HealthCare Information Solutions and several activities of Agfa Specialty Products - posted strong topline growth.
Mainly due to high aluminum prices and adverse product/mix effects, the Group's gross profit margin decreased to 31.8% of revenue.
As a percentage of revenue, Selling and General Administration expenses increased to 21.4% of revenue.
R&D expenses amounted to 32 million Euro, or 6.0% of revenue.
Recurring EBITDA reached 6.5% of revenue, versus 9.0% in the third quarter of 2017. Recurring EBIT reached 4.0% of revenue.
Partly due to costs related to the transformation of the Company, restructuring and non-recurring items resulted in an expense of 15 million Euro, versus an expense of 9 million Euro in the previous year.
The net finance costs increased from 8 million Euro in the third quarter of 2017 to 11 million Euro.
Income tax expenses decreased to 0 million Euro.
As a result of the elements mentioned above, the Agfa-Gevaert Group posted a net loss of 5 million Euro.
Financial position and cash flow
At the end of the third quarter of 2018, total assets were 2,348 million Euro, compared to 2,233 million Euro at the end of 2017.
Trade working capital moved from 644 million Euro (26% of sales) at the end of 2017 to 653 million Euro (29% of sales) at the end of the third quarter of 2018.
Net financial debt amounted to 99 million Euro, versus 18 million Euro at the end of 2017.
Net cash from operating activities amounted to minus 15 million Euro.