Strong order intake increases confidence in sales and profit targets for 2007
First Quarter 2007 Financial Highlights1 :
- Orders at euro 237.5 million, up 19.0% compared to the same period of the year before. On a comparable basis, i.e. excluding the 1Q06 orders of the divested parts of Manufacturing Services, growth was 21.5%.
- Sales at euro 172.5 million, 0.2% up compared to reported sales for 1Q06. Excluding the 1Q06 sales of the divested parts of Manufacturing Services, sales grew by 1.6%. Taking into account also the USD/Euro rate, which declined 9% versus 1Q06, sales increased by 5.6%.
- EBIT at euro 9.7 million, up 4.3% compared to euro 9.3 million in 1Q06. On a comparable basis up 6.6%. On the same basis EBIT margin up to 5.6% from 5.4% in 1Q06. Current earnings per share of euro 0.62 versus euro 0.61.
- Net income at euro 7.5 million, up 2.3% from euro 7.4 million in 1Q06.
- Net earnings per share were euro 0.62, same as the year before.
Kortrijk, Belgium, 25 April, 2007 – Barco n.v. (Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) today announced results for the three-month period ended March 31, 2007.
Barco CEO, Martin De Prycker, commented: “In the first quarter of 2007 order intake grew quarter on quarter by 19%, continuing the strong growth by 12% we had over the full year 2006. Most of our markets contributed to this growth. On a comparable basis, i.e. excluding the orders of the divested parts of the Manufacturing Services division from the first quarter 2006 orders, order growth was even more than 21%. On the same comparable basis sales increased by 1.6%, supported by growth in the Media & Entertainment and the Security & Monitoring divisions. Taking into account the USD/Euro rate, which declined 9% year-on-year, sales growth was 5.6%.”
“At 40.5% gross profit margin was slightly lower compared to 41.0% in the same quarter the year before. On a comparable basis EBIT grew 6.6% to euro 9.7 million from euro 9.1 million. EBIT margin was 5.6% versus 5.4% the year before
“The book-to-bill ratio for the first quarter is 1.38, strengthening our confidence in reaching our 2007 sales growth target of 6 to 9%. This confidence is also supported by new products that will be further introduced during 2007. Orders for the quarter were particularly high in Asia Pacific with close to 30% of total order intake. We confirm our expectation of an increase in profit for 2007 compared to 2006. The divestments of the remaining part of Manufacturing Services and of the division BarcoVision are also moving forward according to plan. The former one is planned to be finalized mid 2007 and the latter in the second half of the year.”
“As of the first quarter of 2007 we communicate results in line with the new company structure. For all comparisons with the first quarter of 2006, the figures of 1Q06 have been adapted to this new structure.”
CONSOLIDATED RESULTS FOR THE QUARTER
Orders and Sales
Versus comparable orders in 1Q06, growth in orders was 21.5%. Compared to reported orders of euro 199.6 million in 1Q06, orders in 1Q07 grew by 19% to euro 237.5 million. The Media & Entertainment division and the Security & Monitoring division showed the strongest growth. Highest growth in order intake in 1Q07 was recorded in Media & Entertainment with 74%.
On a comparable basis, i.e. excluding the sales of the divested parts of Manufacturing Services, sales grew by 1.6% to euro 172.5 million. Taking into account the 9% decline in the USD/Euro rate, the increase was 5.6%. Compared to the reported sales for 1Q06, sales for the quarter were flat. As in orders the same 2 divisions showed the strongest growth.
Sales to Europe, Middle East and Africa represented 52% of consolidated sales, while 32% of sales were realized in the Americas and 16% in Asia Pacific.
The book-to-bill ratio was 1.38 compared with 1.15 for 1Q06.
Book-to-Bill Ratio: last year rolling forward 
Gross Profit & Margin
Gross profit was euro 69.9 million, which is euro 0.3 million up versus 1Q06 on a comparable basis. Gross profit margin was 40.5% compared to 41.0% the year before.
Operating Results (EBIT)
EBIT was euro 9.7 million, 6.6% up from the comparable EBIT of euro 9.1 million in 1Q06. Reported EBIT in that quarter was euro 9.3 million.
With 7.6% of sales general & administration expenses were lower than the 8.2% in 1Q06. Sales and marketing costs were at 17.0% of sales compared to 17.3% in 1Q06. Research & Development expenses went slightly up to 10.1% of sales compared to 9.8% of sales in 1Q06.
Other operating result was euro - 0.2 million versus euro – 0.7 million in 1Q06.
Goodwill Impairment
As in 1Q06, no goodwill impairment was booked in 1Q07.
Income Taxes
Income taxes decreased to euro 1.7 million or 19%, from euro 2.0 million or 21% the year before.
Current earnings per share
Current earnings per share for the quarter increased to euro 0.62 from euro 0.61 for 1Q06.
Net Income
Net income for the quarter increased by 2.3% to euro 7.5 million, or a net margin of 4.4%, from euro 7.4 million for 1Q06 when the net margin was 4.3%.
Net earnings per ordinary share (EPS) remained stable year-on-year at euro 0.62. Fully diluted net earnings per share were euro 0.59 compared with euro 0.58 during the same period the year before.
Balance Sheet
With euro 188.5 million, accounts receivable were 8.5% higher than at 31 March 2006, still reflecting the high sales of 4Q06.
Inventory was at euro 172.6 million, up from euro 154.8 million in the same quarter in 2006, due to the large growth of 19% in orders in 1Q07 compared to 1Q06.
Accounts payable at the end of 1Q07 were euro 84.3 million compared to euro 79.1 million the year before.
At the end of 1Q07 Barco had a net cash position of euro 11.3 million, compared to euro 40.0 million the year before. At 31 December 2006 Barco had a net debt position of euro 12.4 million.
Capital spending for the quarter was 4.129 euro million.
OUTLOOK FOR FULL YEAR 2007
The following statements are forward looking and actual results may differ materially.
The high order intake in 1Q07 supports the growth target for sales between 6 and 9%. Confidence in reaching this target is further supported by new products being introduced in 2007. EBIT margin is also expected to increase compared to the 8.1% margin of 2006, but the uncertainty about the USD/Euro exchange rate remains a factor to take into account. An acceleration of the growth in sales and EBIT is expected in 2Q07 versus 1Q07 as higher quantities of the new products will be shipped out. By the end of 2007 the planned divestments of the Mechanical business unit of the former Manufacturing Services division and the division BarcoVision are also expected to be finalized.
DIVISIONAL RESULTS FOR THE QUARTER
Media & Entertainment division
The events market performed very well with double digit growth in orders (27%) and in sales (10%), thanks to the successful introduction of a new projector and new LED products.
Also the media market enjoyed strong order growth, while sales increased at a slower pace.
One large project in China resulted in a very high growth in orders in digital cinema. Deliveries for this project are planned in 2H07 and through 2008.
Book-to-bill ratio for the division was very high at 1.65.
At 29.8% gross profit margin was lower than at 31.1% in 1Q06, because of strong investment in the extension of production capacity in this division. EBIT margin was 4.6% compared to 4.4% the year before.
Security & Monitoring division
Orders for the division grew double digit, mainly driven by the defense and air traffic control markets.
Sales increased slightly, thanks to growth in the control rooms market and in traffic management. In defense sales declined compared to 1Q06, as they were still affected by the low order intake in this market in 2005 and 1H06.
Book-to-bill was high at 1.35.
Gross profit margin was 42.5% compared to 40.8% the year before. EBIT margin at 2.2% was better than the -2.4% in 1Q06, thanks to the higher sales volume.
Medical Imaging division
Orders and sales in 1Q07 were weaker in the PACS market than in the same period of the year before, which was particularly strong because of the NHS project in the UK. In the modality market orders were higher than in 1Q06 but sales were slightly lower.
The book-to-bill ratio was at 1.09.
Gross profit margin at 45.3% suffered from the lower sales volume and price decline and was lower than the 48.9% of 1Q06. At 10.5% EBIT margin was good, but due to the lower sales volume, the margin ended beneath the 21.5% of the same period the year before.
Other Markets
Orders and sales were up in the simulation market. The presentation market had lower orders and sales in 1Q07 than the year before.
Both orders and sales were lower in the Avionics market than in 1Q06.
BarcoVision, active in the textile machine market and in manufacturing execution systems, had an increase in orders and in sales.
Gross profit margin was at 39.1% versus 37.7% in 1Q06. EBIT margin was 5.7% compared to 1.4% in 1Q06.
SHARE BUY-BACK PROGRAM
Barco bought back 29,055 of its own shares during 1Q07. The company now owns 551,780 of its own shares or 4.37% through a share buy-back program started in 2003.
CONFERENCE CALL
Barco will host a conference call with investors and analysts on April 25, 2007, starting at 4.30 p.m. CET (10.30 a.m. EST), to discuss the results for the quarter. The call will be hosted by the Company’s CEO, Martin De Prycker, Antoon Van Petegem, CFO and JP Tanghe, IRO.
An audiocast of this conference call will be available on the Company’s website www.barco.com by 8 p.m. CET (2 p.m. EST).
ABOUT BARCO
Barco, a global technology company, designs and develops visualization products for a variety of selected professional markets. Barco has its own facilities for Sales & Marketing, Customer Support, R&D and Manufacturing in Europe, North America and Asia Pacific.
Barco (Euronext Brussels: BAR) is headquartered in Belgium and is active in more than 90 countries with about 3,800 employees worldwide. Barco posted sales of euro 751 million in 2006.
For more information and the full report “3 months ended March 31, 2007”, please visit the Company’s website at www.barco.com.
The accounting information taken up in this press release has not been reviewed by the statutory auditor.
1Unless otherwise indicated, all financial and operating data discussed in this announcement are in accordance with IFRS and in million of Euro. Tables state figures in thousands of Euro, unless otherwise noted. Unless otherwise stated, all comparisons are between the three-month period ended March 31, 2007, and the equivalent three-month period ended March 31, 2006.
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