The COVID-19 effects are far reaching, with businesses impacted and companies postponing investments in printers.
According to Agfa, in its Q1 2020 report, as the inkjet market almost came to a standstill in March, a strong COVID-19 impact will be visible in the coming quarters as many companies are postponing investments in high-end large-format printing equipment due to the COVID-19 pandemic.
Agfa’s top line decreased by 4.4 per cent due to “the issues in the offset printing industry, the refocus on higher margin activities in several business areas and the first effects of the COVID-19 pandemic”.
The group’s gross profit margin improved from 32.7 per cent of revenue in the first quarter of 2019 to 33.9 per cent of revenue due to the company’s refocus on quality turnover and improved service and manufacturing efficiencies.
Its adjusted EBIT reached 18 million Euro (3.6 per cent of revenue), versus 20 million Euro (3.9 per cent of revenue) in the first quarter of 2019.
The group posted a net profit of 1 million Euro.
“We feel deeply committed to our customers and the communities they serve. As many of our customers are operating in critical industries, we are taking all measures necessary to guarantee that we can continue supplying and supporting them during the COVID-19 pandemic,” Agfa-Gevaert Group president and CEO Pascal Juéry said.
“However, as always our utmost priority is protecting the health and safety of our employees. Furthermore, we are controlling our working capital levels, capital expenditure, and costs even more rigorously to mitigate as much as possible the impact of the pandemic on our liquidity and bottom-line result.
“As the printing industry – which was already under pressure – is being impacted by the pandemic, we are adapting our production capacity to the worsened market conditions, resorting to temporary unemployment where applicable.
“Despite some impact of COVID-19 on our activities in the printing industry, we delivered a solid set of results and we generated strong cash flows. Our program to reduce working capital continues to be successful. It allowed us to further lower our net financial debt to a very healthy level.”
In spite of these adverse conditions, Agfa said it still considers inkjet as an important growth engine.
The company continues to explore promising business opportunities in new market segments.
As for its Industrial Films and Foils segment, it started to feel a limited COVID-19 impact due to the slowdown in industrial activities, whereas the businesses in the Electronic Print segment resisted well in the first quarter.
The Offset Solutions division’s revenue decreased by 5.8 per cent to 187 million Euro. With the pandemic causing a decrease in advertising and commercial activities, the company expects lower print volumes and a lower demand for printing plates in the coming months.
The company has also postponed its earnings guidance to when it reports the second quarter results in August as a result of the unpredictability caused by COVID-19.
“It is impossible to predict how the COVID-19 pandemic will evolve and the timing of government decisions to ease restrictions is still very uncertain,” the company said.
“Furthermore, it is currently unclear how strongly the Agfa-Gevaert Group’s various markets will be affected. However, in the coming quarters a significant COVID-19 impact on the printing industry is to be expected.
“Today’s situation does not allow the group to assess a quantified impact of the pandemic on its 2020 financial performance and to provide a full year outlook for 2020. Management intends to give more guidance when it reports the second quarter results in August 2020.”
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