Second-quarter objectives achieved
Kortrijk, 28 August 2002. BARCO has announced today that the current result before taxes and before amortization of consolidation goodwill for the 2nd quarter of 2002 is 19.4 million euros. This means 11% of the turnover of 176.1 million euros. The turnover for the 2nd quarter increased by 15.7% compared to the first quarter of 2002. With these results, the expectations regarding the 2nd quarter, set during the General Meeting of May, have been amply achieved.
For the first half of 2002, BARCO thus achieved a turnover of 328.3 million euros with a current result before taxes and before amortization of consolidation goodwill of 29.1 million euros or 8.86 % of the turnover.
In order to increase its profitability, BARCO has continued to conduct thoroughgoing cost control. Thus, the gross margin throughout the first half of 2002 has remained at the same level of 55%, which is 1.5% lower than the first half of 2001, because of less favorable product mix. Further, the operational charges have dropped, even though the research and development efforts have been held on the same level. The reduction of the operational charges was achieved by continued decrease in personnel by 116 persons since the end of 2001. For larger volumes, the competitiveness was increased by shifting production to Czechia, India, and China.
Between the end of 2001 and the end of June 2002, the net cash position of 11.8 million euros increased to 56 million euros. At the basis of this is the decrease in the working capital by the further reduction of the inventory and the cutting back of accounts receivable. In addition, the increase of profit has also made a positive contribution in this regard.
BARCO also announced today that it has further reduced its investments in the graphic sector in line with its strategy to focus on image processing. The share of BARCO in Esko-Graphics, the result of the merger between Barco Graphics and Purup Eskofot, was reduced from 49 % to just under 20%. This operation, together with the other transactions related to the parts of the former Barco Graphics and the amounts written off on the investments in Mania and ManiaBarco, results in an exceptional loss of 28.1 million euros, which leads to a net loss of 7.5 million euros over the first half of 2002.
In the 2nd quarter, orders rose to 191 million euros. This increase by 14% with respect to the first quarter is a clearly positive trend. Since a number of them are long-term orders, BARCO expects only a small increase in turnover in the 3rd and the 4th quarters of 2002 in comparison with the first half of 2002. As regards profitability, BARCO expects a slight improvement with respect to the first half of 2002 but a clearly better result than for the 2nd half of 2001.
The results of Barco Control Rooms have suffered from the regression in the telecom market: during the first half of 2001 telecom accounted for 35 % of the turnover while in the first half of 2002 this was only 8 %. BCD was able to counter the regression in the telecom market to a large extent thanks to the strategic choice made in the previous years to apply its technological know how to other markets such as the broadcast, traffic & surveillance and the utilities markets. Today BARCO can call itself overall market leader with approximately 50% market share.
Barco Projector Innovators enjoys a continued growth in simulation and virtual & augmented reality. During the last 6 months BARCO has further consolidated its position as a leader in 3D CAD design solutions for the automotive industry, where especially Germany performed excellent. New products were introduced like the first DLP stereo projector with incorporated predistortion. This is the perfect product for active stereo viewing on large curved screens, which offer excellent immersion as needed in a large number of scientific and oil & gas applications. The recent acquisition of assets of the German company TAN will further strengthen BARCO’s position in these markets. To better penetrate the Edutainment market with Virtual Reality solutions, a focused product group was started up.
In Intelligent Displays BARCO introduced the iQ series LCD projector range. The iQ series is the first generation of large screen projectors on the market with increased functionality beyond image display focussed towards videoconferencing applications, collaborative working, networking and corporate branding. The market unanimously recognized this product as the new projection industry bench mark and it has received various Industry awards. Order intake on this product is expected to gradually increase for the next quarters.
Within Barco Creative Imaging Barco Events has clearly manifested itself as one of the fastest growing BU's within BARCO with a world-wide market share of 35% in the events/rental & staging LED and projection markets. BARCO has combined its key values of innovation and customer intimacy to become the dominant player in the international events market.
Barco Media, which develops customized display & advertising solutions to the media, sports and out-of-home communication markets, continues its strong growth in the LED market. Sizeable orders awarded such as Reliant Park (Texas) and Fashion Show (Las Vegas) in the USA, as well as collaborative projects with some of the world's leading out-of-home companies sees BARCO lead the way in the exploration of the networked digital signage, sports and corporate image markets.
Barco Digital Cinema recently celebrated the successful international launch of its new D-Cine Premiere digital projection equipment at the Cannes International Film Festival, with a highly acclaimed digital screening of Star Wars - Attack of The Clones. The release of the Star Wars movie in May prompted the largest global roll out of digital projection equipment to date for which BARCO Digital Cinema installed equipment in Thailand, China, the UK, and several Cinemas in continental Europe.
Barco Home Theater launched the new Cine VERSUM total home theater concept based on the latest DLP technology. Unique in its kind in the high-end home theater market, the Cine VERSUM combines state-of-the-art technology with user-friendly integration options. Still, BARCO suffered from a loss of market share in Home Theater over the first semester of 2002.
Thanks to a spectacular growth in orders by 76 % in the 2nd quarter, during the first six months of this year order intake at BarcoView rose by 17% in comparison with the first semester of 2001,. Turnover, on the other hand, decreased by 4 % 1st semester on 1st semester due to a slowdown in Command & Control activities in the US, and a delay in supply of flat panels for Coronis (medical) and Isis (Air Traffic Control). BarcoView is confident that this situation will improve in the 2nd half of 2002. Ebit over the 1st half of 2002 is 5.2 %, thanks to an increase to 10.3 % in the 2nd quarter versus – 2.1 % in the 1st quarter.
After the slowdown in the last quarter of 2001, the Medical Imaging business unit took a flying start this year with a substantial increase in order intake compared to the first half of last year. The newly introduced CORONIS® flat panel display system rapidly gained market acceptance while demand for traditional CRT-based display systems remains high.
The Command & Control business unit continued last year’s market expansion with a 59% increase in orders during the first semester.
The ISIS 2K x 2K main display keeps on taking the Air Traffic Control market by storm, since its launch end of 2000. After important orders from European Aviation Authorities, orders worth several millions of US dollars are coming in from the Asia-Pacific and US markets, ensuring BARCO’s leading position in this market towards the future.
For the C4I product group orders in the U.S. have been more difficult, as programs have been delayed due to budget holds and re-evaluations for the new Homeland Security initiatives. However, these orders should materialize in the second half of the year and programs in support of the US Homeland initiatives may well open new opportunities.
Compared to the 1st quarter of this year, orders at BarcoVision grew by 12 %, while there is a slight increase for the 1st semester compared to the same period of 2001. Orders as well as sales strongly improved as of March after a slow start in the beginning of the year. With orders for the first half of the year at € 51,9 million this means a 33% increase compared with the second half of 2001. In the 2nd quarter sales grew by 21 % versus the 1st quarter. While over the whole of the 1st semester sales decreased by 15 % versus the 1st half of 2001, with € 45.5 million they were at about the same level as in the second half of 2001. EBIT over the 1st half of 2002 is 11.4 %, thanks to an increase to 15.2 % in the 2nd quarter versus 6.8 % in the 1st quarter.
BARCO expects this positive trend to continue for the Sensors & Systems business unit during the second half of the year, as due to a boom in textile machinery sales in China and a revival in the investment climate in the Turkish textile market, orders and sales for both sensor products and controllers are at a high level. Also, the market for monitoring systems took up again resulting in several orders, both in textiles and plastics.
First full size industrial installations of Cyclops, the newly developed automatic inspection system, were completed and several new projects will materialize in the second half of the year.
The results for Machine Vision, the business unit active in quality control and sorting, are slightly positive thanks to a good 2nd quarter, although the tobacco market did not fulfill its promises for growth.
Orders at Barco Subcontracting grew by 4 % in the 1st half compared to the same period in 2001, due to a significant increase, in particular for Barco Specialized Subcontracting, in the 2nd quarter versus the 1st quarter. In the 1st semester of 2002 sales decreased by 14 % compared to the 1st half of the previous year. EBIT however, went up to 4.4 % of sales compared to 2.6 % in the same period of 2001. This was made possible thanks to continuous efforts in optimizing cost, quality and delivery performance at Barco Interconnection Technologies and as in Belgium total staff at Barco Specialized Subcontracting was reduced by 60 people over the last 12 months. Meanwhile the number of employees continues to grow in its plant in the Czech Republic, where more and more larger production series are moved to.
About BARCO
BARCO, with headquarters in Kortrijk, Belgium, has three key activities which are all active in Image Processing. BarcoProjection is in various markets of large screen visualization. BarcoView develops and manufactures display systems for life critical applications, while BarcoVision is in systems for visual inspection and quality control. In 2001, the entire BARCO group delivered a turnover of 792 million EUR. BARCO has a network of subsidiaries, distributors and agents in 97 countries throughout the world. BARCO has been quoted on the Brussels Stock Exchange since 1986, and is now quoted on Brussels/Euronext. BARCO is a BEL 20 and a Next 150 company and is a component of the Dow Jones Sustainability Indexes.
You can find more information about BARCO on the web: http://www.barco.com
AUDITOR’S NOTICE
The statutory auditor has performed a limited review on the semi-annual financial information as per June 30, 2002.
His report has been taken up below:
(free translation)
LIMITED REVIEW REPORT OF THE STATUTORY AUDITOR ON THE SEMI-ANNUAL CONSOLIDATED BALANCE SHEET OF BARCO NV AS OF JUNE 30, 2002 AND THE RELATED CONSOLIDATED INCOME STATEMENT FOR
THE SIX-MONTH PERIOD THEN ENDED
As statutory auditor of Barco NV, we have performed a limited review on Barco’s semi-annual consolidated balance sheet as of June 30, 2002 showing total assets of EUR 619.596 thousands and the related income statement for the six-month period then ended, showing a net loss for the period of EUR 7.559 thousands. Our review has been performed in accordance with the applicable guidelines issued by the Belgian Institute of Company Auditors. Considering their purpose, our review procedures were substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in Belgium, the objective of which is the expression of an opinion on the annual accounts.
Based on our review, we are not aware of any elements which would necessitate material adjustments to the semi-annual consolidated balance sheet as of June 30, 2002 and the consolidated income statement for the six-month period then ended, as taken up in the BARCO NV’s semi-annual report. This report doesn’t relate to the pro forma financials which has been taken up by the company in its semi-annual information.
August 27, 2002
Ernst & Young Reviseurs d’Entreprises BCV (B160)
Statutory auditors
Represented by
Ludo Swolfs,
Partner
Marc Van Hoecke,
Partner
For more information, please contact
