BELGIUM’S AGFA TO SPLIT INTO 3 UNITS

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Belgian imaging firm Agfa Gevaert to split into 3 units
The Belgian imaging technology company Agfa Gevaert has said it is splitting into three independent businesses — graphics, healthcare and materials — to save money.Agfa-Gevaert, which has roots going back nearly 140 years, said that it would operate as the holding company for the three units.Although a savings strategy would not be presented until August, the company said it expected to economize about 250 million euros (315 million dollars) annually by 2008 from splitting up.”This structure will give each business the maximum flexibility to implement its growth strategy and to further reduce costs in line with the rapidly changing market circumstances,” the group said in a statement.Chief executive Marc Olivie said: “Creating three independent businesses with a streamlined cost structure will give each group the best opportunity and the necessary means to strengthen its leading position in its respective markets.”Investors welcomed the decision and shares in the company surged 7.13 percent to 18.78 euros in early afternoon trading while the Bel-20 index of leading Belgian shares was showing a gain of 1.06 percent at 3,599.03 points.KBC Securities analyst Dirk Saelens said: “While the social impact from this restructuring is very negative, from a financial point of view, the company needs to take such drastic measures in order to safeguard future profitability.”A spokesman said it was too early to tell whether the split would lead to job cuts or relocations.The split will create a new business called ‘materials’, which will group film manufacturing activities with the niche speciality products. It will be positioned as an independent supplier of film and related products, the group said.Meanwhile, the graphics and healthcare units have both been already operating independently since the start of the year.The “appropriate structure” for each unit will be defined by early 2007, Agfa-Gevaert said.By division, the group said graphics aimed to be a 1.9-billion-euro business by 2008.The unit would expand in industrial inkjet and emerging markets. It would also invest in innovative technologies in inkjet, digital pre-press, software and services.The group hopes the healthcare unit to achieve at least 1.7 billion euros by 2008. Agfa said the unit will continue to invest in the international roll-out of its hospital IT services.For materials, the group said it would be a 700-million-euro business. It would become a “low-cost producer” of primarily film and related products.The unit would also develop, produce and sell film-based products to industrial markets outside the printing and healthcare sector, such as the printed circuit board industry, aerial photography, movie film and identity and security, Agfa said.It added that the expected decline in some of the traditional film products would be compensated through the growth in new applications

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June 26, 2006 at 10:56 AM