Agfa puts an optimistic spin on tough year

The company's annual result was impacted by an exceptional non-cash pre-tax loss of $727 million by the divestiture of the Consumer Imaging division, as well as the acquisition of the Italian printing plate manufacturer Lastra and the divestiture in November 2004 of Agfa Monotype Corporation, the fonts and typography software activity.

Agfa is now comprised of two stand-alone businesses, Graphic Systems and HealthCare. One out of two hospitals and printing houses in the world are Agfa customers. The Group is attempting to leverage this customer base and its core competencies to build new growth platforms: industrial inkjet for Graphic Systems and enterprise IT for HealthCare.

Graphic Systems reported a turnover of AUD$2,832 million (Euro1,673 m), an increase of 3.1 percent compared to 2003. Sales were affected by the acquisitions of Lastra, Dotrix, active in inkjet printing, and ProImage, a software provider for the graphic industry and by the Monotype divestiture. Organic sales, excluding the impact of acquisitions and divestitures, showed continuous improvement during the year after a weak start in the beginning of 2004.

The impact of the improved trading environment was offset by increased price erosion and raw material costs. The operating result before restructuring and exceptional items reached $177 million, compared to $197.8 million in 2003. Return on sales amounted to 6.3 percent (7.2 percent in 2003). After taking into account the restructuring charges – mainly related to the integration of Lastra and the ongoing efforts to improve the operational efficiency – and the exceptional gain of $120 million Euros on the Monotype divestiture, the operating result was $287million, compared to $152 million in 2003.

In addition to increasing market access and volumes, the Lastra acquisition provides Agfa with intellectual property in thermal digital plates and with opportunities to increase operational efficiencies. Moreover, Agfa set new standards by launching two important innovations: the first chemistry-free thermal printing plate, Azura, for which sales exceed expectations, and the screening software, Sublima, a breakthrough in printing quality.

Agfa confirmed its leading position in the growing software segment for the newspaper business through the acquisition of ProImage, an Israeli developer of browser-based digital workflow solutions.

Agfa signed several computer-to-plate contracts with leading newspaper groups, including Italian newspaper Corriere della Sera, the Daily News of Thailand, Singapore Press Holdings Limited and Mainichi Shimbun Group of Japan, the third largest newspaper group in the world.

Industrial inkjet
Agfa is now entering the industrial inkjet-printing arena. As in prepress, Agfa will provide customers with complete solutions including equipment, consumables, software and services, based on proprietary technology and partnerships with leaders in the industry. Partners include Xaar for printing heads and Thieme for screen printing. Agfa recently introduced Agfa-developed and manufactured inks based on proprietary technology and intellectual property.

At the beginning of 2004 Agfa acquired the Belgian company Dotrix, a specialist in digital inkjet colour printing systems for the packaging and decoration markets.