KORTRIJK, Belgium — Barco announced its results for its fourth quarter and for all of 2008. While incoming orders booked in the company’s fourth quarter were, at 203.9 million euro, actually up 11.1 percent compared to the previous year, sales for the quarter declined to euro 207.9 million, down 6.6 percent compared to the same period of 2007. Earnings for the quarter were down 24.2 million euro after restructuring and impairment provisions. Before the same provisions, EBIT was down 2.0 million euro. Sales of continuing operations for 2008 were 725.3 million euro, down 1.5 percent compared with 2007. Incoming orders for the year declined by 2.7 percent, to 762.6 million euro in FY08. Earnings for 2008 were 8.9 million euro before restructuring and impairment charges, down almost 50 million euro from 2007. Restructuring and impairment charges amounted to 26.7 million euro.
Working capital was reduced with 35.8 million euro and net debt with 20 million euro to 32.8 million. Citing “a severe and sudden weakening of its businesses during the second half of FY08,” Barco’s board of directors issued a proposal to not to pay a dividend over 2008, noting the global financial uncertainty and the company’s weak results.
Barco noted that the drop in revenues was particularly severe and abrupt in the corporate presentation and events segments, with many of Barco’s customers putting a complete stop on their marketing spending. Since these segments had historically been very strong contributors to the company’s profits, their sudden decline forced Barco to implement drastic cost reduction measures and to rethink its strategies.
“The current economic environment prompted us to be decisive about preserving the long term financial and strategic health of the company,” said recently-appointed Barco CEO, Eric van Zele. “Substantial provisions of almost 27 million euro for cost reductions were booked and capitalization rules for R&D expenses were tightened. We further embarked on a major effort to reduce working capital requirements and intend to continue to declare war on discretionary spending and all hidden costs related to lack of operational efficiency. We have narrowed our short term focus on liquidity and an improved cash position and realized a net debt reduction of 20 million euro by end 2008. Our focus in 2009 will remain on reducing net debt.”
In 2008 Barco also divested from non-core activities such as BarcoVision (bought by Itema of Italy) and the company’s maritime safety & security activities, which were sold to Thales of France. In 1Q09 Barco also closed the divestment of its Voxar business unit to Toshiba Medical Systems. Van Zele added: “With these divestments and all other cost-reduction measures, we will have taken some 36 million euro of operating expenses out of the company to restore profitability even at reduced levels of revenues.”
Taking a closer look at Barco’s order book, which at the end of FY08 remained surprisingly healthy and was some 15 percent higher than at the end of FY07, Van Zele noted that “traditional businesses in the Medical and Security & Monitoring divisions remain solid and steady. We are cautiously optimistic about their performance in FY09 although visibility remains rather poor.”
He added, “Moving cautiously into what promises to be a very challenging FY09, we intend to continue to streamline our operations where necessary, improve our management systems and processes and move even more aggressively and creatively into new market niches where we can lead and generate growth.”
For more information, please visit www.barco.com.
