Third quarter 2003 at Agfa-Gevaert

During the first nine months of 2003, Agfa-Gevaert NV recorded total sales of Euro 3.168 billion, 9.5 percent less than in the same period of the previous year. Without unfavorable currency fluctuations, the decrease was only 1.9 percent. While the Health Imaging business continued to grow, Consumer Imaging and (to a lesser degree) Graphic Systems suffered from the weak economic environment.

Cost cutting measures under the company’s “Horizon” restructuring plan resulted in 7.2 percent lower costs for sales and general administration, while R&D expenses decreased by 1.1 percent. The Group booked Euro 46 million restructuring charges and non-recurrent expenses, compared with Euro 67 million in the previous year. The operating result in the first nine months totaled Euro 259.8 million after Euro 302.6 million in the same period last year. Profit before taxes reached Euro 205 million (previous year: Euro 230 million). The net profit fell to Euro 134 million after posting a figure of Euro 149 million in the same period of 2002.

During the first nine months of 2003, sales in the Consumer Imaging business decreased by 14.9 percent to Euro 680 million – without unfavorable currency fluctuations, the drop was 9.3 percent. The operating result turned from Euro 30.4 million in the first three quarters of 2002 to an operating loss of Euro 49.1 million. According to an Agfa press release, this is mainly due to the accelerating shift from analog to digital photography and to sharply reduced travel activities, which affected the demand for consumer films and finishing services. The results of Agfa’s Consumer Imaging business were further impacted by the fact that customers are postponing their purchases of lab equipment. They are waiting for the introduction of the digital wholesale finishing system and the smallest digital minilab, which are both scheduled to hit the market at the beginning of 2004. Earlier this year, Agfa announced measures to restore the profitability of its Consumer Imaging business by – among other things – cutting 750 full-time jobs. The management expects the beneficial impact of these measures to become visible as from next year. For the future, Agfa says the company will run the Consumer Imaging business for cash and expects positive results from 2004.

For the full year 2003, Agfa-Gevaert NV expects total sales of Euro 4.2 billion with a net profit of over Euro 280 billion, as the sale of the non-destructive testing business is likely to be closed before year-end.