Dear shareholder,
Enclosed you find the comments on the Agfa-Gevaert Group's fourth quarter and full year 2007 results.
In the fourth quarter, our sales were affected by the strong Euro. The economic slowdown in the USA also had a considerable impact, mainly in our Agfa Graphics business group. We succeeded in lowering our sales and general administration costs (SG&A), but high silver and aluminum costs continued to weigh on our results. Our efforts to reduce working capital paid off, allowing us to substantially lower our net financial debt.
Agfa Graphics' sales decreased 2.8 percent in local currency. Like in the previous quarters, the business group's prepress segment performed well, keeping its margins stable in spite of the very high aluminum prices. The industrial inkjet segment, on the other hand, continued to face high start-up losses. In 2008, Agfa Graphics will continue the strict implementation of the cost savings in order to offset the further rising raw material costs. The industrial inkjet portfolio is now ready for market introduction and measures are being taken to reach the break-even point for this segment in 2009.
After the weak performance of the third quarter of 2007, Agfa HealthCare's results showed signs of improvement towards the end of the year. The considerable reduction of SG&A costs allowed the business group to partially offset the impact of lower sales and adverse mix and currency effects on its profitability. This year, Agfa HealthCare will focus on implementing the savings plans and additional measures to bring down its costs.
Agfa Specialty Products posted a solid sales increase, driven by important high volume contracts, such as the contract for the delivery of systems and consumables for the production of the Moroccan identity cards. In 2008, the business group aims to further strengthen its position as a consolidator within the film industry. Furthermore, it will continue to develop innovative products for new growth areas.
In the current difficult market conditions, we wish to give absolute priority to the operational improvement of our businesses. The Board of Directors confirms its commitment to a phased demerger of the company, but also continues to examine all possible strategic options. Furthermore, the Board will propose the shareholders at the Annual General Meeting not to pay a dividend for 2007, as it feels that the dividend policy should reflect the company's performance of the last year.
We thank you for your interest in our company.
Katia Waegemans
Director Corporate Communication & IR
