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Agfa Gains as IT Sales, Lower Debt Ease Concern: Brussels Mover

Agfa-Gevaert NV, Europe’s biggest maker of health-care imaging systems, rose the most in five months in Brussels after a surprise increase in health-care revenue and cash generation eased concern about loan covenants.

Agfa climbed as much as 12 percent on Euronext Brussels, the most in intraday trading since Sept. 26, and traded 8 cents higher at 1.47 euros by 10:52 a.m. local time. The shares have lost 55 percent in the past 12 months.

The health-care division reported the biggest revenue increase in five quarters, led by rising sales of higher-margin ORBIS hospital-management software and a recovery in digital-imaging systems. A reduction in inventories helped Agfa to generate 96 million euros ($126 million) of cash from operations in the final quarter, cutting net debt to 267 million euros, or about 1.2 times last year’s earnings before interest, tax, depreciation, amortization and one-time items.

“This should take away fears about possible breaches of debt covenants,” Nico Melsens, an analyst at KBC Securities NV in Brussels, wrote in an investor note. “The impact from the recession on the top line seems more limited than expected and as a consequence results are not as weak as feared.”

The fourth-quarter net loss was 43 million euros, compared with profit of 32 million euros a year earlier, the Mortsel, Belgium-based company said today in a statement. Excluding reorganization costs, operating profit before interest and taxes fell 43 percent to 43 million euros. Analysts projected operating profit of 20.5 million euros, according to the average estimate of three analysts in a Bloomberg News survey.

Agfa set aside an additional 55 million euros in the fourth quarter for reorganization costs linked to declining demand for film products used for X-rays, printed circuit boards and in printing. Customers are scaling back purchases of film as Agfa sought to pass on rising costs of silver, a key raw material used in photographic film.

Assuming no big swings in raw-material prices, Agfa said it aims to restore its Ebitda margin to at least 10 percent “in the medium to long term” from 7.2 percent last year.

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