Belgian image technology company Agfa Gevaert posted slightly lower-than-expected 2003 operating profit on Thursday after it was hit by the euro's strength against the dollar and sluggish markets.
Agfa said in a statement it expects market conditions in two of its three units - Graphics and Consumer Imaging - to remain subdued this year, although its healthcare technical imaging business is expected to grow further.
Agfa also said it will acquire Italian printing plate manufacturer Lastra which had some 240 million euros ($295.1 million) in sales last year.
Agfa will pay in cash and expects the business to contribute to earnings from the first year.
Earnings before interest and tax (EBIT) - excluding proceeds from the sale of a materials-testing unit - fell to 297 million euros ($365.2 million) from 393 million euros, slightly lower than analysts' forecasts of 305.7 million euros.
Sales at the company - restructuring to meet the growing popularity of digital photography - fell 10 percent to 4.2 billion euros.
"Although Agfa's results will be affected if the euro and raw material prices remain at actual levels, the Group will also benefit from its continued focus on further improving efficiency and cost-saving in all of its businesses," Agfa said.
Its shares were down one percent at 22.85 euros as the market sought more details about each of the company's units.
"Agfa remains modest in its outlook and gave no specific forecast. We await more details by division to consider a change in our rating," KBC analyst Dirk Saelens said in a research report.
CAPITAL GAIN, RESTRUCTURING: Net profit rose 66.5 percent to a better-than-expected 323 million euros, boosted by a higher-than-expected 231 million euros capital gain from the sale of its materials-testing unit to General Electric.
Gross profit margin eased to 41.9 percent from 42.2 percent.
Agfa Gevaert faces more than 50 percent exposure to the dollar. It said its results would continue to be affected by the euro at current levels, but it was doing its best to offset this via cost-cutting.
Efforts to reduce working capital would begin to show results this year, leading to strong cash flows, it said.
Agfa's latest restructuring plan - Orion - is expected to cut costs by 200 million euros and reduce working capital to generate an extra 350 million euros in cash by end-2005.
Agfa's consumer imaging unit, its weakest, posted an 84 million euros operating loss in 2003 due to a depressed travel market and the competition from digital films, although Agfa expects it to regenerate cash this year.
Its technical imaging (healthcare) business provided the bulk of operating profits, with earnings rising 15.9 percent to 291 million euros.
Agfa also plans to pay a 0.75 euro per share gross dividend, which includes a 0.25 euros extraordinary dividend on the gain from the sale of the testing unit.
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