Barco Financial Results - Weak second quarter - Good order intake - Euro 30 million cost reduction plan to improve results

July 23, 2008

Source: Barco

Barco n.v. today announced results for the three-month period ended June 30, 2008.

Referring to the 2Q08 results Barco CEO, Martin De Prycker, commented: “The second quarter results were weak, even though at constant currencies we did grow sales marginally by 1%. The strong performance of the Security & Monitoring and Medical divisions could not fully compensate for the decline in sales in the Media & Entertainment division and in Other Markets.”

Mr De Prycker stated that management expects the economic uncertainty to continue, making it imperative to reduce costs. He explained: “A cost reduction plan of euro 30 million is being implemented. This plan is composed of manpower reductions, the streamlining of the business portfolio and cost containment actions. It will result in an improvement of EBIT in 2009 and offset inflation.” As to the second half of 2008 he said: “We expect to take a one time restructuring cost of around euro 20 million in 2H08. Notwithstanding the current economic circumstances, we expect a significant improvement of the EBIT level before restructuring in 2H08 compared to 1H08, thanks to the good order intake, the cost reduction plan and the introduction of a number of new products.” In this respect Mr de Prycker also referred to the order intake in the second quarter: “Growth year-on-year was 2% despite the negative currency impact. In addition, we are currently working on a number of large contracts.”

Pointing at the recent acquisition of Austin based High End Systems Mr De Prycker said that this company had already contributed positively to sales and profit in the second quarter. He further added that the impact on 2008 EPS is estimated to be positive.

Exerpts From Bloomberg article:

The world's second-largest maker of digital cinema projectors plans to fire an undisclosed number of workers and signaled it may sell some unprofitable operations to reduce annual expenses by 30 million euros. Chief Executive Officer Martin De Prycker stuck to an earlier forecast that full-year sales will increase after first-half revenue unexpectedly dropped.

De Prycker declined to give an estimate for the total number of workers being fired, saying only that the company reduced its workforce of 3,744 by 3 percent this month.

Barco is facing increased competition from Brookings, South Dakota-based Daktronics Inc. and Christie Digital Systems Inc., the world's largest maker of digital cinema projectors, which are benefiting from a weaker dollar to win clients outside North America, at a time when global economic growth is slowing.

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