Barco Achieves 10% Profit with Sales Unchanged in 1st Quarter

KORTRIJK, BELGIUM, MAY 14, 2003 - In the first quarter of 2003, Barco achieved an operating result before amortization of goodwill of 15.4 million euro or 10.2% of sales. Thus Barco managed to maintain profitability at the same level as the entire year of 2002, despite the uncertainties and the difficult market conditions that characterized the first quarter. The net result amounts to 9.8 million euro or 6.5% of sales. For the entire year of 2002, the net result amounted to only 3% of sales. At 151.1 million euro, sales in the first quarter of 2003 remained roughly the same as in the same period in 2002. Orders fell by 5.7% as a result of the sharp decline in the US dollar in relation to the euro and the great uncertainty due to the war in Iraq. Without the steep rise of the euro compared to the first quarter of 2002, sales would have risen by 9% and orders by 3%. The book-to-bill ratio was 1.05 for the first quarter.

The operating result before amortization of goodwill increased by 42% compared to the first quarter of 2002. This is due to the rise in the gross profit margin from 41% to 44% in the first quarter of 2003. The current percentage is in keeping with the margin in the second half of 2002. Costs remained at the same levels in General & Administration and Sales & Marketing. At 11%, the Research & Development costs also remained at the same level as in 2002.

The persisting economic uncertainty continues to have a negative effect on the investment climate. Moreover, SARS is increasingly complicating the process of doing business in a number of Asian countries. For the second quarter of 2003, Barco expects to achieve sales of between 150 and 160 million euro and an operating result before amortization of goodwill of roughly 10% of sales, which means a continuation of the profit levels of 2002.

Through further improvement of the internal processes and the efforts the company continues to make in the development of new products, Barco will be ready to reap the fruits of the resurgence of the economy, whenever that may begin. The solutions that Barco develops continue to focus on boosting customer productivity. This has proven to be a strong point, even under more difficult market conditions.

At BarcoProjection, sales and orders in the first quarter remained clearly below the level of the same quarter in 2002, due to the uncertainty in the relevant markets. Lower sales were situated especially in the media market, civil flight simulation and the utilities market for control rooms. Nonetheless, the first European successes were booked in the media market, and the acquisitions carried out in the first quarter in China and the USA will provide for stable growth in the near future. The operating result before amortization of goodwill decreased to 4% as a result of lower sales. On the other hand, the gross profit margin rose from 43% in the first quarter of 2002 to 45% in 2003. A number of new products were also introduced, such as the mid-range simulator projector with DLP technology, the S-lite, an LED solution intended specifically for the media market, and a control room solution based on DLP technology. Orders in the first quarter were 14% higher than sales realized.

The 62% rise in sales at BarcoView is mainly due to the medical and the air traffic control markets. Orders also rose by 20% compared to the first quarter of last year, despite a slowdown in Defense & Security orders resulting from the war in Iraq, and a certain number of postponed orders from air traffic control centers, especially in the USA and Asia, resulting from the crisis in the aviation sector. The gross profit margin rose from 43% to 46% due to more outsourcing in Medical Imaging and increased efficiency in operations and the supply chain. At 17%, the operating result before amortization of goodwill remains at a high level. In the first quarter of 2003, in addition to the already existing bluebase version of the 5-megapixel medical flat screen, a clearbase version was also introduced into the market.

BarcoVision sales rose for the whole division by 12%, with the textile activity continuing to perform well, while Machine Vision (food sorting) saw its sales decline. The book-to-bill ratio was 1.12, due to the high level of orders at Machine Vision. As for the textile machine market, Barco expects growth to stagnate in the second half of 2003. The gross profit margin rose from 38% to 44%, while the operating result before amortization of goodwill was 17%.


The results for the first quarter of 2003 have not been audited.

See also www.barco.com for the complete report of the results for the first quarter of 2003, with comments on the changeover to IFRS in annex. Additionally, on May 14th, from 10.00 pm onward, the audiocast of the conference call with analysts and investors of May 14th, 2003 will also be available.

About Barco
Barco, an international company headquartered in Kortrijk, Belgium, is active in three key areas of imaging technology. Barco designs and develops solutions for large screen visualization, display solutions for life-critical applications, and systems for visual inspection. Barco has a network of subsidiaries, distributors and agents in almost 100 countries. Barco is quoted on Brussels/Euronext and is a BEL 20 and a Next 150 company.

 

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