09 March 2018 xBusiness

Agfa launches portfolio rationalisation for prepress products

Agfa is planning to weed out peripheral and weaker product lines as it adapts to declining markets and rising aluminium prices.

Agfa Graphics is to undertake a rationalisation of its prepress products portfolio in the coming year. This will have a financial impact on the business the company warns in the report on its 2017 sales.

These show the impact of stiff competition in some areas of prepress and the rising price of aluminium. There are also reorganisational costs linked to its healthcare division.

Combined this led to a revenue decline from €2.54 billion in 2016 to €2.44 billion in 2017, generation an operating product of €138 million (€166 million). Within this, the graphics division delivered sales worth €1,195 million (€1,267 million) and Ebitda of €77.0 million compared to €106.5 million in 2016.

The company picks out inkjet for achieving a double digital growth in sakes for both large format machinery and inkjet inks. LED UV curable inks are highlighted and it says that the introduction of new Anapurna models spurred sales. In contrast prepress sales were hit by sectorial declines in demand, newspapers being typical of this, and by the margin squeezing impact of rising aluminium prices.

Neverthelesss the chemistry-free Azura plates performed well and Agfa is emphasising the ECO3 strategy of combining consumables, hardware and software to drive down print’s environmental footprint.

It will start to rationalise the products in the portfolio the company says. The sale of the UV inkjet inks business for single pass packaging and labels to Siegwerk can be considered a first step in this activity. More must follow in the remainder of 2018, but there are no announcements on how this will be delivered.

Sales in the healthcare division also fell, down to €1,052 million (€1,090 million) but because of the stronger margins in this business, Ebitda was €131.1 million (€146.5 million). The much smaller speciality products business increased sales to €195 million (€180 million) thanks to increasing demand for printed circuit board consumables and the Synaps synthetic paper products.

“2017 has been the first year of a two-year transition period,” says president and CEO Christian Reinaudo. “Having overachieved on our profitability targets in 2016, we have taken a number of initiatives to prepare the group for future growth by addressing the complexity of the company and the top line decline.”

Among the initiatives highlighted he says: “The fourth initiative is situated in the Agfa Graphics business group. In 2017, the inkjet segment posted double-digit growth, as we started to benefit from the inkjet portfolio rationalisation we conducted in the past few years.

“Inspired by the success of the measures in inkjet, we decided to conduct a similar product portfolio exercise in the prepress segment, which is suffering from market driven volume decreases, price erosion and aluminium price increases. More in particular, we decided to stop certain reseller activities in the US. We are convinced that this decision will allow us to better focus on graphics’ core businesses.”

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Rationalisation coming

Rationalisation coming

Agfa has announced that it plans rationalisation in the prepress business in order to create stronger margins. The plate business is under pressure as volumes decline and the price of aluminium increases. Rationalisation has worked in the inkjet division.

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