refile ROUNDUP Agfa-Gevaert plunges on Q2 disappointments and demerger delay

refile ROUNDUP Agfa-Gevaert plunges on Q2 disappointments and demerger delay

	Published : Tue, 31 Jul 2007 16:20 By : Agencies Print this Story

BRUSSELS (Thomson Financial) - Shares in Agfa-Gevaert NV plunged after the imaging technology and software group posted a disappointing set of second quarter results and put back the company's demerger by six months to focus on operational improvements.

The numbers and news of the delay prompted a rating cut at both KBC Securities and Degroof.

Brokerage disappointment was mirrored in the market, with the share plummeting 14.10 pct at 15.29 eur at 4.44 pm.

KBC cut its rating on the stock to are duce' from 'accumulate'.

'After a decent first quarter that gave hope for more improvement, the second quarter results are a major disappointment. Further... management admitted the major operational weakness and said it would focus more on operational improvement,' the broker said.

'The results show that Agfa is not yet worth any sign of confidence from investors. Management has a lot of difficulties in getting the ship under control.'

Degroof, cutting its recommendation to 'accumulate' from 'buy', said the results 'let down on all lines' except the bottom line.

Rabo Securities analysts said in a note to clients that the results were 'way below expectations'.

Earlier, the group said its second quarter net profit soared 50 pct on weak comparables, with last year's result impacted by a hefty charge on the divestment of its consumer imaging division.

Net profit rose to 42.0 mln eur from 28.0 mln last year. Sales dipped 1.6 pct to 845.0 mln eur from 859.0 mln, pressured by high raw material costs for aluminium and silver and euro/US dollar currency effects.

EBIT on ongoing operations fell 28.6 pct to 55.0 mln eur from 77.0 mln.

By division, graphics EBIT on ongoing operations fell to 14.7 mln eur from 18.1 mln. Healthcare EBIT on ongoing operations fell to 33.3 mln eur from 51.2 mln. The figure for specialty products came in at 9.3 mln eur, down from 14.2 mln.

On outlook, the group said it expects the company's demerger to be completed by summer next year, with the group implementing the transaction based on the closing balance sheet of Dec 31 at the end of this year. The completion was earlier scheduled for by the end of the year.

The listing of independent companies will also take place before summer 2008. The group plans to divide into three separately listed companies; Agfa Graphics, Agfa Healthcare and Agfa Materials.

By division, the group said its healthcare unit's second half EBIT will 'substantially exceed' the first half. It added that specialist product sales will continue to be strong in the second half.

For graphics, it said it expects an increase in inkjet equipment sales in the second half and further growth in the digital computer-to-plate segment.

The group said it now has a workforce of 14,000. Sales and general administration costs, excluding non-recurring items, fell to 196.0 mln eur in the second quarter from 209.0 mln last year.

'Group results are clearly affected by the very high costs of aluminium and by the investments in the development and roll-out of innovative technologies. On the other hand, the cost savings plan and the growth strategies of the different businesses will further contribute to the results,' the company said.

The group is targeting saving 250 mln eur a year by 2008 under a plan to cut its workforce by 2,000.

Healthcare will realise 41 pct of the savings, with materials generating 33 pct and graphics 26 pct.

Sales for graphics are targeted at 1.9 bln eur by 2008. For healthcare the figure is 1.7 bln. For materials, the group said it will be 700 mln eur.

simon.zekaria@thomson.com

sz/dca

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