Barco Climbs as Sales Growth Recovery Allays Cinema Concern

Barco NV, the Belgian maker of digital cinema projectors, rose to a two-month high in Brussels trading as a recovery in second-quarter revenue growth allayed some concerns that slowing cinema sales may hurt profit.

Barco gained for a sixth straight day, adding 3.6 percent to 47.16 euros at 5:40 p.m. on Euronext Brussels. That’s the highest closing price since May 11. Second-quarter sales jumped 17 percent after growth had stalled in the previous three-month period and net income in the six months through June increased 28 percent to 43.5 million euros ($53.4 million).

“An outstanding set of numbers, which comes as a relief after the fairly disappointing first-quarter update,” said Nico Melsens, an analyst at KBC Securities NV in Brussels, as he raised his rating on the shares to buy. “The order book is up 5 percent, showing there’s nothing to worry about in terms of orders.”

Barco introduced displays for surgery rooms and dental radiology and stepped up marketing efforts in emerging markets after shifting some manufacturing to China. Its cinema-projector business, which accounts for about 30 percent of total sales, may have peaked as the value of firm orders won by the company’s entertainment division fell almost 14 percent in the first half.

That division, which also includes projectors for corporate presentations and events, was by far Barco’s most profitable in the period, generating 56 percent of earnings before interest, tax, depreciation and amortization.

Cash Flow

The Kortrijk, Belgium-based company said it generated 29.1 million euros of cash not required for reinvestment in the period and used most of that money for acquisitions, according to its first-half report.

It bought JAOtech Ltd., a U.K.-based maker of patient bedside terminals, for 10 million euros and spent an additional 15.2 million euros on the purchase of Sunnyvale, California-based IP Video Systems Inc., which offers decoders, servers and software for Internet-based video streaming.

Any proceeds from future disposals will be deployed to strengthen the four main divisions, Chief Executive Officer Eric Van Zele told analysts on a conference call today.

“Rather than milking Barco for higher levels of profitability, we will become more aggressive in terms of investing in new growth initiatives,” he said. “I wouldn’t expect spectacular Ebit-growth in the second half because that isn’t our intent.”

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