Falling healthcare sales contribute to weak Q2 for Agfa

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Agfa HealthCare Impax Suite. Source: Agfa  

Agfa-Gevaert reported that its healthcare division experienced falling sales for the 2008 second quarter, which ended June 30.

Mainly due to currency effects, Agfa said its sales declined 8.1 percent to €777 million ($1.17 billion) from year-ago results. The company said that “Agfa HealthCare's competitive position suffered from the strong euro.”

Agfa said healthcare sales decreased 8.4 percent (14.3 percent including currency effects) to €313 million ($470 million) from the second quarter of 2007. The company said that the “decrease is mainly attributable to North America and the United Kingdom (where a large part of the important NHS contract was booked in 2007).”

In these regions, Agfa said that the strong euro affected its healthcare division's position and the decline in “the x-ray business is more outspoken and not compensated by healthcare IT.” The computed radiography segment performed well in the second quarter, whereas the imaging IT segment started to recover following the weak performance in the first three months of the year, according to the company.

For the second consecutive quarter, Agfa HealthCare said it lowered its selling, general and Administrative (SG &A) expenses by almost 20 percent, representing 24.9 percent of sales, compared to 26.3 percent in the second quarter of 2007. However, the company said “the efforts did not suffice to offset the weaker sales and adverse mix effects.”

Agfa HealthCare also said that the high silver price also had an impact on its profitability, as approximately half of the business group's sales is from film products. The recurring earnings before interest, taxes, depreciation and amortization (EBITDA) margin amounted to 11 percent of sales, and the recurring EBITA was €19.5 million ($29.3 million), or 6.2 percent of sales.