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Results Second Quarter 2003 and 6 months ended June 30, 2003. Martin De Prycker President & CEO August 22, 2003. Operational results Q2 2003 and H1 2002. Results per quarter. in € mio. Overall comments Q2 2003.
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Results Second Quarter 2003 and 6 months ended June 30, 2003 Martin De Prycker President & CEO August 22, 2003
Results per quarter in € mio
Overall comments Q2 2003 • Comparable sales declining 2 % at unchanged €/$ rate versus Q2 2002 (19.1 % decline) • Nominal sales declining 11 % at actual €/$ rate vs Q2 2002 • Weak economy delayed ordering decisions in April/May, reducing our Q2 sales, but order level picked up again in June • Book-to-bill ratio very good at 1.07 > 1 • EBITA at 11 %, lower than Q2 2002 (12.7 %) • Price pressure compensated by cost reduction on direct cost. As such, gross profit stable at 45 % • Dollar has caused a reduction of EBITA of around 4 € million vs last year • EBITA first half 2003 at 10.6 %, higher than first half 2002 at 10 %, despite 9 € million less profit because of $ effect
BarcoProjection (1) in € mio
BarcoProjection (2) • Sales • Market leadership in events confirmed through strong sales levels both in LED and projection • Weak sales caused by economic uncertainty, mainly affecting • Control rooms in utilities • Simulation in civil aviation • Fast market transition from CRT to DLP hurting Home Theater, led to restructuring decision • Stand-alone projectors • Orders • Successes in media US through Logan acquisition and in Europe • Strong orders in control rooms for traffic, surveillance and broadcast put foundation for good H2 • First successes with simulation for homeland security and V&AR in medical • EBITA • Despite reduced sales volume, profit margin stable at 45 %, resulting in EBITA above 6 % • New products introduced • Streaming video for traffic & security control rooms • 2K digital cinema projector (first order received) • Digital projector with i-stereo inside • Acquisition status • Trans-Lux West successfully integrated in Q2 • Leyard delayed because of SARS and unresolved legal issues. Target closing in September
BarcoView (1) in € mio
BarcoView (2) • Sales • Air Traffic Control performing well, keeping our market share substantially above 50% • Slightly weaker sales in medical imaging as our customers are depleting their inventory levels • Orders • Strong ATC orders confirm our market leadership • Avionics orders strong • Orders in Defense & Security remain low, but market pick up anticipated for 2nd half 2003 • EBITA • Gross profit stable at 46 % • Profit margin good above 13 % • New products introduced • Mid range medical LCD flat panel (Nio) • Multifunctional rugged display for defense & security
BarcoVision (1) in € mio
BarcoVision (2) • Sales • Textile business performing well, but first signs of business weakness in systems • Good sales for Machine Vision • Orders • Order level of textile lower, entering the downturn cycle in the textile business • EBITA • Gross profit stable at 44 % • Profit margin very strong above 18 % • New products to be launched at ITMA 03 • New polypropylene sensor • Extended range of on-loom inspection (Cyclops) • New family of wireless data collection & monitoring systems
Situation Machine Vision • Barco has sold its food sorting machine business to BEST nv on July 31 and deconsolidated as of July 1, resulting in a marginal non-operating profit • Machine Vision had a sales of 8.5 € million in the first half of 2003 with low profitability • With a 15 % market share, it was unlikely to bring this business to the average Barco profit margin level over a reasonable period of time
Barco Subcontracting in € mio
Barco Subcontracting • Sales • Weaker than Q1, but operating cost decreased by reducing number of temporary contracts and temporary unemployment • Orders • Stronger than Q1 2003 • EBITA • Cost containment allowed us to improve the operational profit margin to 6.6 % • Organization • Assessing a more efficient organization of all electronic sub-assembly activities within all Barco divisions
Geographical breakdown of sales FY 2002 Q2 2003 In Q2 03, sales to Americas increased by 3.8% in US $ vs Q2 02
Share buy-back program • As approved at the General Shareholder meeting, Barco started a share buy-back program to offset the dilution of its option programs • On July 31, Barco had bought back 95,928 shares for a total of 4.98 € million
Expectations Q3 2003 • Target sales: 140-150 € million which means an increase of at least 3 % at comparable $ • Target EBITA: between 7 and 12 € million, i.e. comparable to Q3 2002 • Economic uncertainty continues to keep investment climate weak in certain markets • Dollar evolution impacts both sales – as 45 % of our sales is in $ related currencies – and EBITA and makes Q4 predictability more difficult, but normally Q4 is the strongest quarter • Continue to improve • Internal processes w.r.t. non-quality cost, delivery performance, working capital and indirect manufacturing cost • Sales coverage: China, Japan and Canada • New product development