Agfa has reported a second quarter drop in revenue.
In announcing its results, the company cited areas that had a “strong impact” on its business. These include the Covid-19 pandemic; issues in the offset printing industry; and the refocus on higher margin activities.
Revenue decreased in several business areas such as offset by 25.1 per cent from Q2 2019 to €155m ($274m).
Its statement says, “As expected, the Covid-19 pandemic had a very strong impact in the second quarter on top of the structural decline of the offset markets. The pandemic causes a decrease in advertising and commercial activities. This leads to lower print volumes and a lower demand for printing plates.”
Agfa intends to improve profitability and to address the significant decline in market demand. It will review its offset business model, simplifying its organisation and streamlining its product offering.
The company says the current pricing levels in the industry are not sustainable. It will look into ways to adapt the earning model for certain services it provides to its customers.
Agfa will also reorganise its printing plate manufacturing capacity. It will close its printing plate factories in Pont-à-Marcq, France and Leeds, UK.
Large format hit
Within its digital print and chemicals division, the division’s gross profit margin amounted to 26.2 per cent of revenue, versus 31.3 per cent in the second quarter of 2019. The company states, “In the field of digital print, Covid-19 heavily impacted the large-format printing equipment business in the second quarter. The market came almost to a standstill towards the end of the first quarter, as many companies have become reluctant to invest in new printing machines.
“However, Agfa is preparing various new product releases in order to be ready for the post-Covid market rebound.”
The company adds that, as ink sales continue to grow sequentially, it has commercially launched solutions for new digital printing applications. These includes laminate floorings and leather. It will continue developing solutions for other new applications, for example, packaging.
Agfa has invested in a new manufacturing plant for water-based inkjet inks. It adds, “The Covid-19 pandemic continues to cause a lot of uncertainty in the Agfa-Gevaert Group’s industries. Mainly in the printing industry, a significant Covid-19 impact is still to be expected in the coming quarters.
“Following a weak third quarter, the Agfa-Gevaert Group expects to see more momentum in the fourth quarter, on the assumption that the current business environment will not deteriorate again. Today’s situation does not allow the group to assess a quantified impact of the COVID-19 pandemic on its 2020 financial performance.”