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19 February 04, page 1Company Confidential
Results Q4 and full year 2003
Analyst meeting19 February 2004
Martin De Prycker
19 February 04, page 2Company Confidential
Operational results Q4 2003 and full year 2003
in € mio Q4 2002 2002 Q4 2003 2003 Growth Q4 03 / Q4 02
Growth 03 / 02
Ordersnominal
158.9 680.7 188.5 662.6 19% (3%)
Orderscomparable **
158.9 680.7 200.4 715.4 26% 5%
Sales nominal
194.9 669.0 174.7 628.9 (10%) (6%)
Sales comparable **
194.9 669.0 188.3 681.8 (3%) 2%
EBITA 28.0 71.2 26.2* 69.1* (6%) (3%)
EBITA comparable **
28.0 71.2 33.2 90.0 19% 26%
EBITA % 14.3 10.6 15.0 11.0 5% 4%
Book-to-bill 0.80 1.02 1.08 1.05 35% 3%
* Before restructuring of € 2.5 mio** $/€ 19 % lower in Q4** $/€ 19 % lower in full year
19 February 04, page 3Company Confidential
Results per quarter
0
20
40
60
80
100
120
140
160
180
200
Q102
Q202
Q302
Q402
Q103
Q203
Q303
Q403
OrdersSalesEBI TA
in € mio
19 February 04, page 4Company Confidential
Results Q4 2003
19 February 04, page 5Company Confidential
Overall comments Q4 2003
• Very good order intake at € 188.5 mio, i.e. 19 % growth at nominal €/$ rate and 26 % growth at comparable rate
• High book-to-bill ratio of 1.08 has increased our orderbook for 2004, especially in M&E and Simulation
• Gross profit margin improved again to 45 %, despite strong price pressure especially in Media and negative dollar evolution
• Comparable sales 3 % below Q4 2002, as last year had an extremely large delivery of ATC panels
• EBITA at 15 %, remains strong despite lower sales than Q4 2002
• Dollar decline caused a lower EBITA of € 7 mio in Q4, versus an unchanged dollar
19 February 04, page 6Company Confidential
Evolution of results per division
in € mioQ4 02 Q4 03 Q4 02 Q4 03
BarcoProjection 88.4 94.1 10.6 14.8BarcoView 70.4 59.1 14.2 11.2BarcoVision 25.0 13.6 4.1 1.0Barco Manuf. Serv. 21.0 13.5 0.9 -0.4Other -10.0 -5.6 -1.8 -0.5Total 194.9 174.7 28.0 26.2
Sales EBI TA
19 February 04, page 7Company Confidential
BarcoProjection (1)
0
20
40
60
80
100
120
Q102
Q202
Q302
Q402
Q103
Q203
Q303
Q403
OrdersSalesEBI TA
in € mio
19 February 04, page 8Company Confidential
BarcoProjection (2)
• Orders– Strong book-to-bill ratio at 1.15
• Sales– 6 % growth in nominal sales vs Q4 2002
• Margins– Gross profit margin improved to 44 % despite high price
pressure, as a result of higher volume– EBITA margin high at 15.7 %, driven by higher volume
and continued cost control
4Q 03
19 February 04, page 9Company Confidential
BarcoProjection (3)
• On January 1, 2004 BarcoProjection was split into 3 separate divisions, reporting on same the level as other divisions
• These 3 divisions are– Media & Entertainment
• Events• Media• Cinema (digital cinema and high end home cinema)
– Control Rooms– Presentation & Simulation
• Presentation• Simulation
4Q 03
19 February 04, page 10Company Confidential
BarcoProjection (4) Media & Entertainment
• Orders– High book-to-bill ratio at 1.2– Successes in Digital Cinema, Media and Events– Strong price pressure in US/China due to low dollar
• Sales– High Media sales in the US and Europe and Events
worldwide
• Margins– EBITA margin at 9 % below our long term target, due
to heavy investments in• Extending capacity in China• Sales growth in US and Asia• R&D to further reduce product cost, as well as to launch new
products for Media, Events and Digital Cinema
• New products introduced– 3 mm high resolution LED wall
4Q 03
19 February 04, page 11Company Confidential
Acquisition “Folsom Research”, January 2004
• Based in Sacramento, USA with 75 employees
• Worldleader in “Beyond Display” products– Image Processing– Image Communication– Image Functionality & Interactivity
• Application Markets– Events (Media & Entertainment) -> above 50%– Radar (BarcoView) -> around 20%– Presentation & Simulation -> below 30%
• Figures– Orders 2003 $ 18.5 mio – Sales 2003 $ 16.5 mio– EBITA 2003 $ +1.5 mio
• Synergies with Barco– Strong market position in US, potential synergies with Barco sales
organization in Europe and Asia– Extension of “Beyond Display” products of Barco
19 February 04, page 12Company Confidential
BarcoProjection (5) Control Rooms
• Orders– Continued strong growth in orders– Book-to-bill at 1.06
• Sales– Good sales in all segments, particularly strong in
Traffic & Surveillance– High growth in China, India and Korea; and recovery
in Europe
• Margins– EBITA margin high at 22 %
• New products introduced– Streaming video functionality in display controllers
4Q 03
19 February 04, page 13Company Confidential
BarcoProjection (6) Presentation & Simulation
• Orders– Strong order intake with book-to-bill at 1.2– Good orders in Simulation and Edutainment– Good orders for car design
• Sales– Presentation
• Good level of sales, especially in large projects with focus on operational cost of our customer
• Shift towards higher end products and solutions– Simulation
• Slow civil aviation sales with partial recovery• Good orders for systems while product sales weakens• Increased market share in V&AR
• Margins– High EBITA margin at 19 %
• New products introduced– Cost effective system solutions in V&R– Home Land Defense/Security solutions in USA– Tracking device for enhanced immersion in virtual reality
4Q 03
19 February 04, page 14Company Confidential
BarcoView (1)
-10
0
10
20
30
40
50
60
70
80
Q102
Q202
Q302
Q402
Q103
Q203
Q303
Q403
OrdersSalesEBI TA
in € mio
19 February 04, page 15Company Confidential
BarcoView (2)
• Orders – Book-to-bill ratio at 1.0– Orders in Defense & Security strong– Orders in Medical remain at high level– Large order volume for Avionics
• Sales– Robust sales volume in Avionics– Strong sales volume in medical confirms our market
leadership– ATC and Defense deliveries remain high, although below last
year– Delivery of LCD panels requires constant attention, although
risk has been mitigated by using several suppliers
• Margins– Extremely good EBITA margin of 19 %, driven by the increase
in gross profit margin to 49 %
• New products introduced– RGB recorder for Defense & Security applications
4Q 03
19 February 04, page 16Company Confidential
BarcoVision (1)
0
5
10
15
20
25
30
Q102
Q202
Q302
Q402
Q103
Q203
Q303
Q403
OrdersSalesEBI TA
in € mio
19 February 04, page 17Company Confidential
BarcoVision (2)
• Sales & Orders– Machine Vision no longer included since July 2003
onwards– Weaker sales volume in textile business as we are in
the middle of the down-cycle, although commercial activity is picking up since ITMA in November 2003
• First volume order received for Cyclops (visual inspection of woven material)
• Margins– Gross profit margin remains stable at 43 %– EBITA margin lower than usual at 8 % due to
extremely low volumes
4Q 03
19 February 04, page 18Company Confidential
Barco Manufacturing Services (1)
-5
0
5
10
15
20
25
Q102
Q202
Q302
Q402
Q103
Q203
Q303
Q403
OrdersSalesEBI TA
in € mio
19 February 04, page 19Company Confidential
Barco Manufacturing Services (2)
• Sales & Orders– Weaker sales/orders than Q4 2002
• Margins– Gross profit margin declined from 34 % in Q1 to
31 %– Indirect manufacturing cost not yet fully adjusted to
current manufacturing volumes, resulting in a 3 % negative EBITA margin
– No impact yet of restructuring on results 4Q 2003
• Reorganization– Restructuring cost will be taken as a special charge
in Q4 (€ 2.5 mio). This is comparable to the € 2.5 mio annual savings, which are expected to take full effect in 2005
4Q 03
19 February 04, page 20Company Confidential
Geographical breakdown of sales
51.5%
18.3%
30.2%
54.4%31.1%
14.5%
EMEAAMERI CASASI APAC.
Q4 2003
Q3 2003
19 February 04, page 21Company Confidential
Results Full Year 2003
19 February 04, page 22Company Confidential
Operational results full year 2003in € mio 2002 2003 Growth
03 / 02
Ordersnominal
680.7 662.6 (3%)
Orderscomparable **
680.7 715.4 5%
Sales nominal
669.0 628.9 (6%)
Sales comparable **
669.0 681.8 2%
EBITA 71.2 69.1* (3%)
EBITA comparable **
71.2 90.0 26%
EBITA % 10.6 11.0 4%
Book-to-bill 1.02 1.05 3%
* Before restructuring of € 2.5 mio** $/€ 19 % lower in full year
19 February 04, page 23Company Confidential
Comments full year 2003
• Further focus our organization on image processing for B2B with worldwide leadership
– Full exit Esko-Graphics– Sale of dotrix– Sale of Machine Vision– Acquisitions in Media (Trans-Lux West, Leyard) – Acquisition in Events (Folsom in 2004)
• Order growth of 5 % at equal currencies• Sales growth of 2 % at equal currencies• Dollar decline had a negative impact on EBITA of more than
€ 20 million• Focus on reducing inventory has resulted in a further
improvement. Actions to further reduce the number of different components will continue to have a positive influence on inventory in 2004
• A/R did not improve further in 2003 but actions for improved pre- and post- sales service will show first results in 2004
19 February 04, page 24Company Confidential
Key figures Income Statement 2003
in € mio FY 02 % FY 03 %
SalesCost of goods sold
669.0-372.5
100.0-55.7
628.9-351.0
100.0-55.8
Gross ProfitResearch & DevelopmentSales & MarketingGeneral & AdministrationOther operating result
296.5-70.8-98.0-49.1-7.4
44.3-10.6-14.6-7.3-1.1
277.9-68.4
-100.3-45.6
5.4
44.2-10.9-15.9-7.20.9
EBITAGoodwill amortization
71.2-7.7
10.6-1.2
69.1-6.4
11.0-1.0
Operating Result 63.5 9.5 62.7 10.0
Non-operating result -27.8 -9.4
Income Taxes -18.1 -6.7
Net Income 17.7 2.6 46.6 7.4
Current Cash Flow 114.4 17.1 109.8 17.5
Current Earnings per Share (in €) 4.39 - 4.42 -
Net Earnings per Share (in €) 1.43 - 3.77 -
19 February 04, page 25Company Confidential
Key figures Balance Sheet
in € mio 31/12/02 30/06/03 31/12/03
Accounts Receivable
158.5 148.3 149.5
Inventory 118.0 130.4 103.3
Cash 122.5 101.9 133.4
Financial debt
34.4 25.2 29.2
19 February 04, page 26Company Confidential
Overview of R&D
in € mio 2002 2003
R&D expense 71.5 69.7
Capitalized -35.5 -36.1
Amortized 34.8 34.7
Total 70.8 68.4
19 February 04, page 27Company Confidential
Expectations 2004
19 February 04, page 28Company Confidential
Growth strategy 2004 (1)
Displays Image processing
Content &applications
EU
NA
APAC
Vertical markets
Products Solutions
Geographies
19 February 04, page 29Company Confidential
Growth strategy 2004 (2)
• Main segments where large absolute growth is expected in 2004 through internal and external investments
– Medical– Events (incl. Folsom acquisition)– Media (incl. Trans-Lux West & Leyard acquisition)– Surveillance & security
• Increase sales and marketing efforts in regions with strong growing economies such as North America and Asia (e.g. opening office in Canada)
• Further evolve towards more systems business
19 February 04, page 30Company Confidential
Expectations 2004: main operational guidelines
• Keep R&D budget around € 70 million, equal to 2003, but with full focus on products within our strategy (exit dotrix, Machine Vision, …)
• Further improve pre-sales and post-sales processes to improve customer service and A/R
• Implement manufacturing restructuring announced last year to reduce operational cost
• Increase manufacturing in China to further reduce product cost, also resulting in higher natural hedging
• Gradual roll out of CRM software and new ERP software. CRM should result in better planning already in 2004. ERP cost savings to be expected in 2005
19 February 04, page 31Company Confidential
Expectations Q1 2004
• Sales target: between € 147 – 155 million, i.e. more than 6 % year on year growth at constant dollar exchange rate
• EBITA of between € 13 and 17 million• Every % decline in the value of the dollar impacts
EBITA by around € 1 million on a yearly basis
19 February 04, page 32Company Confidential
Dividend
Proposal of the Board of Directors to the annual shareholders’ meeting on May 12, 2004
Dividend will be increased to € 2.00 from € 1.92 last year