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 user 2010-10-06 at 7:18:05 am Views: 113
  • #24139
    Highlights third quarter:
    - Total revenues € 669 million (2009: € 631 million)
    - Non-recurring revenues grew 5% organically; recurring revenues dropped 2% organically
    - Normalized operating income € 16 million (2009: € 5 million)
    - Net income € 6 million (2009: € -25 million)
    - Successful steps in cooperation with Canon

    Comments by Rokus van Iperen, Chairman of the Board of Executive Directors:
    continued to be cost conscious amidst ongoing economic uncertainty.
    Nevertheless certain markets showed clear signs of recovery.

    revenues grew by 6% to € 669 million, although organically revenue
    remained stable. Nonrecurring revenue grew, for the first time in ten
    quarters, by 5%. This growth came primarily from Europe and emerging
    markets. Recently introduced, innovative printers, like the Océ
    JetStream 1000, the Océ Arizona 550 GT and the Océ PlotWave 300,
    contributed substantially to the improved printer sales. Recurring
    revenues declined by 2%.We increased our EBIT due to better utilization
    of the factories as well as the positive impact of our action program
    2008-2010. We have returned to net profit, although realizing the level
    is still modest.In the third quarter good progress was made regarding
    cross selling of Canon products via Océ, as well as preparing
    integration in various regions and functions. These developments are set
    to continue.”

    Group results third quarter 2010
    Following the
    completion of the Canon offer, Océ anticipated substantial one-off
    items. This paragraph provides an overview excluding these one-off
    items. The largest part of these one-off items has been included in the
    second quarter 2010 earnings release.

    Total revenues
    in the quarter increased 6% to € 669 million, due to foreign exchange
    effects. Organic growth was 0%.Our share of color grew to 36% of
    revenues, up from 30% in the same period last year.Non-recurring
    revenues increased 12% to € 193 million. The organic increase was 5%.
    This was the first quarterly growth for 10 quarters. The growth came
    mainly from Europe and emerging markets.Recurring revenues increased 4%
    to € 476 million. The organic decline was 2%, in line with the second

    Action program
    Our action program is almost fully
    implemented. The increase of the operating income was partly the result
    of the cost savings program. In the third quarter, Océ reduced costs by €
    7 million, exclusive of inflation and restructuring cost. Year to date,
    Océ also reduced headcount by 890 FTEs compared to fourth quarter of
    2009 (460 FTE’s up to the second quarter).

    Gross margin and operating income
    the third quarter of 2010, normalized gross margin was 38.1% (2009:
    36.6%). The increase was the result of several factors. Compared to the
    third quarter of 2009 the changes in currency exchange rates caused a
    negative hedge variance of € –0.4 million, leading to a gross margin
    decrease of 0.1% point. The gross margin increase for DDS and WFPS in
    total amounted to 1.1% points, mainly due to better utilization of the
    factories in Venlo and Poing and the aforementioned action program.OBS
    gross margin increased by 0.3%, mainly due to changes in the business
    mix. The remaining 0.2% improvement was the result of a group mix

    Normalized operating expenses amounted to 35.7% of
    revenues (2009: 35.9%), due to the impact of the action program.Net
    R&D capitalization amounted to € 5 million, which is € 9 million
    lower compared to the third quarter of 2009 (€ 14 million).On balance,
    normalized operating income amounted to € 16 million (2009: € 5
    million). Operating income amounted to € 13 million (2009: € –25

    Finance expenses and net income
    Finance expenses
    (net) amounted to € –5 million (2009: € –14 million). As a result of the
    refinancing of Océ’s debt by Canon, the finance expenses decreased
    compared to last year. On balance, net income was € 6 million (2009: €
    –25 million). Earnings per ordinary share for net income attributable to
    shareholders was € 0.05 (2009: € –0.31).

    Balance sheet and RoCE
    balance sheet total was € 2,332 million (2009: € 2,397 million). Net
    Capital Employed was € 1,179 million (2009: € 1,171 million). In
    relation to normalized operating income, RoCE amounted to 4.1 % (2009:
    2.9%). The aforementioned balance sheet and Net Capital Employed amounts
    include the Canon related one-off items.

    Free cash flow
    cash flow in the quarter decreased to € –9 million (2009: € 19 million),
    due to lower free cash flow from temporarily higher inventories and
    trade and other receivables, partly compensated by higher free cash flow
    from creditors.

    One-off items
    As already announced in the
    first quarter earnings release, Océ anticipated substantial one-off
    items as a consequence of the change of control following completion of
    the Canon offer on March 9, 2010. In the second quarter of 2010, Océ
    reported € 103 million one-off items due to the Canon transaction.
    Therefore, the nine months net income including these one-off items is €
    –95 million. In the third quarter, Océ incurred a € 3 million one-off
    item, impacting operating expenses.

    Update cooperation with Canon
    priorities for 2010 regarding the combination Canon and Océ encompass
    capturing cross-selling opportunities, co-operation in technology and
    product development and preparing the integration. In the third quarter,
    Océ continued to prepare the introduction of Canon hardware and
    software products. Océ is training sales and service forces on Canon
    products and is preparing marketing plans and distribution.

    the small format business, implementation started during the quarter.
    Amongst others, Océ now sells Canon imagePRESS C 7000, Canon imageRUNNER
    ADVANCE 8000 and Canon imagePROGRAF printers as well as Canon printers
    connected to Océ PRISMA software.In the meantime, Océ customers in the
    US and Europe started buying Canon office and production printers
    through the Océ sales channel, at the same time ensuring support of the
    Océ service technicians for maintenance of Canon’s equipment.

    the wide format business, a joint project has started to determine the
    cross sales opportunities in which both Canon and Océ can deliver a
    stronger product portfolio to their customers. Canon will also sell
    selected Océ high volume products in certain of their markets and
    channels.In the fourth quarter, Océ is participating in Canon Expo; a
    global technology event, being held in New York, Paris, Tokyo and
    Shanghai (spring 2011), highlighting major innovations in printing and
    document management, amongst others.

    SBU results third quarter
    paragraph provides an overview of developments in the Strategic
    Business Units, excluding Canon related one-offs, described in the
    previous paragraph.

    Digital Document Systems (DDS)
    Revenues in
    DDS amounted to € 375 million. Organically, revenues remained stable.
    The share of color increased to 30% of revenues (2009: 24%) driven by
    Océ’s production color continuous feed systems.Based on recently issued
    2009 product placement data by industry analyst firm InfoTrends, Océ
    continues to lead the continuous feed market in the US and Western
    Europe with a 26% share, including inkjet and toner-based technologies.
    During 2010, Océ received a significant number of orders in this
    segment, also for its new Océ JetStream 1000 printing system.

    Océ JetStream 1000 is perfectly suited for transaction, direct mail,
    TransPromo, digital book and manual printing and produces 1010 A4 duplex
    pages per minute.In the office segment, Océ and Canon have jointly
    designed a go to market strategy. In the US, Océ has started selling
    Canon office printers. Prior to yearend, Océ will offer Canon office
    printers to all its customers worldwide.Non-recurring revenues amounted
    to € 126 million. Organically, revenues increased by 2%.Recurring
    revenues amounted to € 249 million. Organically, revenues declined by
    2%. This was due to lower print volumes and subsequently lower revenues
    in office and black & white continuous feed. DDS grew its revenues
    in production cutsheet and continuous feed color.Normalized operating
    income improved to € 3 million (2009: € –3 million), due to cost savings
    and better utilization in the Venlo and Poing factories.

    Wide Format Printing Systems (WFPS)
    to the third quarter of 2009 the WFPS revenues recovered, mainly driven
    by revenue development of Technical Document Systems in the US and
    Asia. Non-recurring revenues recovered while recurring revenues were
    lagging behind due to volume and price decline.Revenues in WFPS amounted
    to € 180 million. Organically, revenues were in line with the prior
    year. The share of color increased to 50% (2009: 45%), mainly as a
    result of the newly-introduced Océ ColorWave 300 and Océ CS2400 color
    systems for the technical documentation market.

    To further
    strengthen its color portfolio for the wide format graphics market, Océ
    started selling its highspeed Océ Arizona 550 XT flatbed printer which
    has double the speed of the Océ Arizona 350 XT system.Non-recurring
    revenues amounted to € 67 million. Organically, revenues increased by
    12%. Growth occurred in almost all markets, with highest growth in
    Asia.Recurring revenues amounted to € 113 million. Organically,
    recurring revenues declined by 3%.Normalized operating income was € 9
    million (2009: € 6 million) thanks to cost savings and better
    utilization of the Venlo factory.

    Océ Business Services (OBS)
    in OBS amounted to € 114 million. Organically, revenues decreased by
    2%. Revenue growth in Europe continued. The US is facing a decline in
    the traditional mail business, which was partly compensated through
    growth in other services.Normalized operating income improved to € 4
    million (2009: € 2 million), due to improved gross margins and tight
    operational expense management.

    Customers will remain
    cost conscious amidst ongoing economic uncertainty. Nevertheless, they
    are expected to invest in systems and services that directly add value
    to their business. Therefore Océ will continue to introduce innovations
    for all its market segments.Canon and Océ will continue to work towards
    creating the best combination in the printing industry. The priorities
    for 2010 remain unchanged and encompass capturing cross-selling
    opportunities, cooperation in technology and product development and
    preparing integration.Océ’s fourth quarter 2010 will consist of four
    months as Océ will align financial reporting with Canon’s, consequently
    starting its new fiscal year at January 1, 2011. Results on fourth
    quarter and full year 2010 will be disclosed by the end of January 2011.