Xeikon N.V.: Net profit up on lower sales in 2011 due to efficiency improvements01.03.2012
Xeikon N.V. (‘Xeikon’) has announced its results for 2011. Compared with 2010, sales fell by 7%, from EUR 139.3 million to EUR 129.8 million. The net profit was EUR 7.0 million, compared with a net profit of EUR 4.7 million in 2010.
The group’s operational cash flow (EBITDA) for 2011 was EUR 30.5 million, virtually the same as in 2010 (EUR 31.3 million). The operating result (EBIT) for 2011 increased substantially to EUR 19.5 million (2010: EUR 14.8 million). The net profit for 2011 was EUR 7.0 million, including the negative result on the stake in Accentis of EUR 7.7 million (2010: negative result of EUR 7.9 million).
Significant events during the year
Extraordinary General Meeting of 15 November 2011
On 15 November 2011, the management announced that the company’s name had been changed to Xeikon N.V. The name change was approved at the Extraordinary General Meeting of Shareholders of 15 November 2011.
The management believes that the company name Xeikon fits more closely with the Xeikon brand, which has a strong reputation on the market.At NYSE Euronext in Amsterdam, a request was made for the listing of and trade in the company’s ordinary shares (with a nominal value of EUR 4.00) to commence under the new name Xeikon N.V. with effect from Wednesday 30 November 2011. The stock code was changed from PGX to XEI; the ISIN code remained unchanged as NL0006007247.
Xeikon N.V. acquires Flexolaser, a leading manufacturer of CtP platesetters for flexo and letter press
applications, as well as all rights to the use of the Thermoflex trademark
Strategic acquisitions aimed at expanding Xeikon’s range of solutions and reinforcing its focus on the label
and packaging markets.
On 9 January 2012, Xeikon N.V. announced that it had acquired both the technology and the production facilities for Flexolaser solutions, which had previously belonged to RSD Technik GmbH and Flexolaser GmbH, leading manufacturers of computer-to-plate (CtP) solutions for both flexo and letterpress applications.
Xeikon also announced that it had acquired the rights to the Thermoflex trademark from the Eastman Kodak Company.
These separate transactions, the details of which were arranged on a confidential basis, were agreed on at the end of 2011. These strategic acquisitions fit perfectly with Xeikon’s strategy of launching a new product line within its CtP business and of becoming a leading digital solutions provider in the flexographic market. Xeikon will be expanding its sales, marketing and service teams worldwide in order to achieve these objectives.
Xeikon’s strategy is to build a strong position in the label and packaging markets by offering printing solutions including all associated products. Xeikon has been manufacturing industry-leading digital label presses and CtP solutions for more than 15 years now. With CtP for flexo it will be able to further expand its customer base and offer unique solutions for both digital and flexo printing.
Discussion of the annual results
Sales and operating income
Compared with 2010, sales fell 7%. Sales remained fairly steady at Digital Printing Solutions, but were down at Prepress Solutions. The group has invested in Flexolaser in order to limit this negative trend at Prepress Solutions in the future. The main developments are as follows:
- Prepress Solutions sales during 2011 fell by more than 20% from their 2010 level. This drop was due to increasing competition from Chinese suppliers and the difficult market conditions in the conventional offset printing market. In late 2011, Xeikon launched a new line of products for basysPrint which should prove an effective response to the increasing competition, and it will also introduce new prepress products at the graphics trade fair Drupa. Sales during 2011 for the Digital Printing Solutions segment were just below their 2010 level, due to difficult market conditions. Despite the economic uncertainty and the reluctance to invest, more new customers were taken on than in 2010.
- Equipment sales in 2011 were down 3% compared with 2010.
- Recurring income from consumables and service activities fell by 5.6%. Around 2% of the decrease was due to negative currency translation differences; the remaining 3.6% was directly due to the economic uncertainty, which meant that customers had lower print volumes to process.
- In geographical terms, sales rose in America (+7.4%), but fell in Asia (-7.7%) and Europe (-12.8%). The decrease in Europe is mainly due to Prepress Solutions activities.
- Sales in the second half of the year represent 49% of the total for the year.
Operating income was EUR 134.0 million, compared with EUR 143.0 million in 2010. Other operating income was EUR 4.2 million (2010: EUR 3.7 million), and consisted mainly of grants received and R&D costs passed on to third parties.
Compared with the previous financial year, operational cash flow (EBITDA) dropped 3% to EUR 30.5 million (2010: EUR 31.3 million). As a result of strict cost management, efficiency improvements and a better product mix, EBITDA in 2011 remained virtually the same as in 2010, despite the fall in sales.
Operating result (EBIT)
The operating result (EBIT) was EUR 19.5 million, which represents a 32% increase on 2010 (EUR 14.8 million). This increase is due to lower depreciation, impairments and provisions by a combined total of EUR 5.6 million. The details are as follows:
- Depreciation decreased from EUR 12.7 million in 2010 to EUR 9.0 million in 2011.
- Non-recurring impairment losses were EUR 0.3 million in respect of customer receivables (2010: EUR 0.6 million), and EUR 1.6 million in respect of inventory (2010: EUR 2.2 million). The group did not record any provisions in 2011 (2010: EUR 1.0 million).
Financial result and result before tax
The exchange rate losses in 2011 amounted to EUR 0.3 million compared with a gain of EUR 1.5 million in 2010. These losses were mainly due to the weakening of the US dollar against the euro. The result before tax was EUR 11.5 million (2010: EUR 8.5 million).
Xeikon recognized a negative result of EUR 7.7 million from its stake in Accentis in 2011 (2010: EUR 7.9 million). This negative result was due to impairments on the real estate portfolio of Accentis.
The tax burden in 2011 was 23% (2010: 23%) of the result before tax adjusted for the share in the result of associates.
Net result – group share
The group share in the net profit was EUR 7.1 million, compared with EUR 4.8 million in 2010.
Shareholders’ equity at the end of the reporting period was EUR 177.2 million. This represents a net increase of EUR 6.3 million from last year, mainly arising from the net profit for the year (EUR 7.0 million) and purchases of treasury shares (EUR -1.4 million).
At the end of the financial year, Xeikon had a EUR 7 million receivable on Punch International (2010: EUR 10 million) and a EUR 26.6 million receivable on Accentis (2010: EUR 26.6 million); both are shown under long-term receivables.
Net financial debt fell from EUR 35.3 million to EUR 29.0 million.
Cash flow statement
Cash from operating activities was EUR 14.0 million for 2011, resulting from an operational cash flow of EUR 28.3 million and an increase in working capital of EUR 14.3 million. Of the increase in working capital in 2011, EUR 4.9 million (2010: EUR 1.2 million) was due to issued finance leases and deferred trade receivables from customers.
Investments included the acquisition of the land and premises at Heultje (Westerlo, Belgium). The price was EUR 4.2 million and was paid partly via the acquisition of existing financing and partly in cash.
The investment cash flow totaled EUR -4.6 million, and consisted among other items of the capitalization of EUR 5.1 million of R&D projects and the reduction of the long-term receivable from Punch International by EUR 3 million (amount receivable as at 31 December 2011: EUR 7 million).
Cash from financing activities came to EUR -10.0 million (2010: EUR -16.3 million), and included the repayment of EUR 10 million on the syndicated loan taken out with a bank consortium.
Information about financial loan agreements
The group has a syndicated loan with a bank consortium for which contractual provisions are made in covenants that are assessed on a half-yearly basis. At the end of 2011, the amount of the outstanding loan was EUR 45 million (2010: EUR 55 million). At the end of 2011, Xeikon was in compliance with all conditions set in the covenants.
The group does not wish to announce any concrete objectives.
Changes in the Supervisory Board and the Executive Board
No changes occurred in the Supervisory Board and Executive Board other than those announced in the press release of 28 February 2011.
Purchase of treasury shares
The management has decided to make use of the authority granted to it to purchase treasury shares. Under this authority, the management is empowered to purchase treasury shares up to the maximum quantity that may be vested in the company by virtue of the law and the articles of association at the time of acquisition, at a price between their par value and 110% of the stock-market price at the time of acquisition. In its quarterly trading updates, the company will report periodically on the number of treasury shares purchased and the average acquisition price. Since the authority was granted, the company has purchased a total of 3,032,752 treasury shares at an average price of EUR 2.67. This represents 10.56% of the total number of shares outstanding. In the course of 2011, Xeikon has purchased 430,047 treasury shares.
The Executive Board proposes that no dividend be distributed for the 2011 financial year.