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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good morning and good afternoon and thank you for standing by. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS). Today's conference is being recorded, and if you have any objections, you may disconnect at this time.
And now, I will turn the meeting over to Mr. Jo Cornu. Thank you, sir, please go ahead.
JO CORNU, PRESIDENT AND CEO, AGFA-GEVAERT: Hello. Good afternoon. Welcome to this conference call. What I plan to do is go relatively briefly over the presentation, which you -- I'm sure have all seen. So, I don't -- I won't read all the numbers, but I would just like to comment the most important facts and then, we can move to the question-and-answer period.
If you look at slide number two, which gives you the overall figures, as you can see, at the level of the corporation, we have been impacted in the second quarter by, I would say, three main events. The first one is, of course, well known. This is the currency effect. The euro has continued to be very strong and this has obviously impacted the sales because the translation of sales outside the euro zone, of course, is lower.
In local currencies, our sales went down by EUR2.6 million -- with 2.6%. This is mainly due to the economic slowdown and this is then the second fact in US and UK. As you will remember, we had a slight growth in the -- in local currency in the first quarter and we have a slight decline in the second quarter mainly because of the changing economic circumstances.
Another important factor is that raw materials prices have been high. We knew of course that they would be high because as you will remember, we have done forward buying of these raw materials and this has had a negative impact in the second quarter. So, versus last year, we had a negative impact of EUR18 million and this of course falls directly to the bottom line. And this then gave us an EBIT of EUR38 million.
If I look at slide number three, our financial debt, as you can see, has increased, but it has increased a lot less than what we had seen last year. Last year, we went up by nearly EUR100 million. This time we have limited the increase, which is seasonal, to EUR34 million. It is seasonal because in the second quarter, we always build up inventory in order to be able to serve our customers during the summer months, when we have of course in our factories lower level of activity.
If you look more in details at page four, you can see that we had, because of this slightly negative trend in inventories, we had a situation in trade receivables, which was more or less stable and this remains an important point of attention and the trade tables, I don't think, are important to discuss. So as I said, three effects. As you can see, hopefully, on page five, currency, raw materials and then the economic situation in some countries.
If we go down below EBIT, on page six, we had restructuring costs of EUR11 million, which brings us an operating result of EUR27 million and then we have a non-operating result of EUR21 million, half of which is in fact the interest costs. And so finally with taxes of EUR3 million, we get a net result of EUR3 million.
If we now go to, in more detail, to the three business groups, let me start with graphics. As you can see in local currency, graphics had a slight decline, 0.5%, in the second quarter. We already had a slight increase in the first quarter. This reflects, in fact, a weakening of the economy, particularly in US and in UK.
On the other hand, we have been able to keep all gross profit more or less at the same percentage, notwithstanding the fact that we had a negative influence of the raw materials costs for about EUR8 million. The SG&A went down, but the SG&A does not go down as much as we would have liked. Mainly because of the fact that in this quarter, we had the drupa affair, which hit us for about EUR3 million of costs.
So totally, we had an EBIT of EUR13.7 million, EUR1 million lower than last year. But in fact, in judging these results, you have to take into account this EUR8 million raw material cost, as you can see on page 10. We can also -- they have to take into account the drupa for EUR3 million and we also had the write down of receivables for EUR1 million.
The good news is that as far as the inkjet program is concerned, we are following the plan. We are on track. The losses have come down as we have planned and also in terms of the business itself, we are on track. So, we are still planning to have...
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