Belgian imaging technology group Agfa-Gevaert delayed its planned split-up after second-quarter results fell below market expectations. Agfa shares dropped as much as 14.3 percent to a 13-month low of 15.25 euros in an otherwise stronger Belgian market.
The company, which specialises in hospital imaging systems and top-end printers for publishers and newspapers, said on Tuesday it would postpone its demerger to before summer 2008 from a previous schedule of later this year.
Quarterly earnings before interest and tax (EBIT) before restructuring dropped 29 percent to 55 million euros ($75.2 million), compared with an average forecast of 74 million in a Reuters poll of 10 analysts. "In view of the second-quarter results, the board of directors decided to dedicate all management resources to operational improvements," Agfa said.
It plans to divide into three separately listed companies - Agfa Graphics, Agfa Health Care and Agfa Materials. Agfa also said it would examine outside interest to buy parts of its business, although the demerger was its first priority.
"I don't want you to be overenthusiastic. We have had interest before. We are only doing our duty as a responsible board," Chairman Luc Verhoeven told a news conference.
ING analyst Arnaud Goosens said the figures were very bad and argued structural problems left Agfa little choice but to delay the demerger. "There's no appetite with this kind of performance."
The company has been trying to push through price hikes, sales of newer digital products and savings to make up for the dollar's fall against the euro, rising costs of raw materials silver and aluminium and the decline of its analogue business. On Tuesday, Agfa said the high price of aluminium, costing it 17 million euros more than a year ago, and investment in the new technology would affect its results.
Agfa should boost inkjet sales in the second half and would address costs at health care and problems at its cardiology business, Verhoeven said. Agfa has not given a forecast for 2007, but has given a sales outlook for next year.
On Tuesday, it reiterated the graphics figure of 1.9 billion euros, said health care was likely to be closer to 1.6 billion euros than the original 1.7 billion euros envisaged and that materials should exceed its target of 700 million euros.
Sales in the April to June period dropped 1.6 percent to 845 million euros, against an analyst forecast of 864 million euros. Without currency effects, Agfa said the figure would have risen by 0.8 percent.
The operating profit of Agfa's graphics division fell 19 percent to 14.7 million euros. Its health care division reported a 35 percent drop in operating profit to 33.3 million euros. Agfa had to provision a further 70 million to 80 million euros to cover restructuring costs related to the axing of some 2,000 of its workforce, a plan designed to realise 250 million euros in cost savings by 2008. Chief Financial Officer Anne Vleminckx said about half of the savings should be realised by the end of this year.