Agfa-Gevaert stuck to a mixed forecast for 2005 after a lower-than-expected profit for the second quarter highlighted its struggle to improve margins amid high raw material costs and falling prices.
The Belgian maker of digital medical and printing equipment reiterated its forecast that profits would be lower despite higher sales in 2005, which it described as a "transitory" year.
"Agfa expects stronger sales in the next six months and a particularly strong last quarter in HealthCare," it said on August 18. Agfa shares are down more than 15 percent this year. Agfa has restructured several times since it listed in 1999, gradually shifting to digital from analogue technology.
Last year, it spun off its Consumer Imaging or photographic business and split its two remaining businesses into legally separate entities, raising expectations of a sell-off. Chief Executive Marc Olivie dismissed speculation that Dutch electronics giant Philips> could be a buyer for HealthCare, saying he ignored proposals from investment bankers. "I've stopped answering the phone," he told reporters after a news conference at Agfa's headquarters near Antwerp.
Olivie said he was convinced of the strategy to run the two businesses - HealthCare and Graphic Systems - separately, adding that he would keep looking to cut costs.
For the quarter, operating profit was 48 million euros ($59 million) after restructuring against a loss of 366 million euros a year ago, which included a charge of 430 million euros for the sale of photographic film business. The figure was below the 51.5 million euros average forecast by five analysts polled by Reuters.
Total sales fell 15.6 percent to 849 million euros. Excluding currency fluctuations, acquisitions and divestitures, they would have risen 0.6 percent.
Graphic Systems sales gained 8 percent to 446 million euros, while HealthCare sales rose 0.8 percent to 359 million euros.
"There are no big upsets (but) the numbers were uninspiring," said ING analyst Jean-Marc Mayeur.
Agfa said Graphic Systems had begun to benefit from actions to counter price erosion, while HealthCare's trading environment remained weaker than expected.
Chief Financial Officer Anne Vleminckx told Reuters she saw as "very manageable" the risk posed by its former photographic business going into bankruptcy protection in May. Agfa loaned 112 million euros to the business, renamed AgfaPhoto Gmbh.
It expected some 9 million to 10 million euros in pre-financing of working capital to be reimbursed within the next three to four months.
It is also co-funding a special purpose company to help employees who lose their jobs.
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