Skip to main content

Dow Jones Business News
NEWS SNAP:Oce Swings To 3Q Net Loss On Impairment Charge
Friday October 10, 4:51 am ET
By Neil Moorhouse, Of DOW JONES NEWSWIRES


AMSTERDAM (Dow Jones)--Dutch printing systems maker Oce NV Friday swung to a loss in the third quarter, against expectations for a profit, as it took a hit from an underperforming unit.
The company posted a EUR5.6 million net loss from a EUR21.0 million profit last year, after it took a EUR18.3 million impairment charge for a print procurement unit and its display graphics operations.

ADVERTISEMENT


Oce said that Practical Print Solutions, which it acquired two years ago, had failed to deliver expected profits and growth and it had decided to take a charge for the goodwill it had paid.

But even without the charge, Oce still missed market expectations for its profit and sales performance, and analysts said that they would consider lowering their estimates and recommendations.

Profit before the charges came in at EUR12.7 million from EUR21.0 million last year, somewhat below the EUR15 million analysts had been expecting.

At 0739 GMT, Oce shares were down 5.7% at EUR11.36, underperforming the MidKap index, which was down 0.7%.

Oce, which competes with U.S. giants such as Xerox Corp (NYSE:XRX - News) and generates 40% of its sales in the U.S., proffered some hope that its decline in sales may be slowing - but remained cautious.

"The decline in revenues, in particular in the sale of new systems, is becoming less pronounced," Oce said.

"Although this trend appears to be continuing in the fourth quarter, it is still too early to determine whether the recovery is structural."

It said that customers continue to postpone their investment decisions and that the strong euro will impact profits and revenues in the last quarter of the year.

For the full year, Oce forecasts a profit after tax of EUR70 million before exceptional items.

Petercam analyst Stefan Genoe, who rates Oce at hold, said he would lower his earnings estimates as the full year guidance was "prudent." He said that although the decline in sales is decelerating, the trend in sales remains down at a moderate pace. Earnings will also continued to be pressured by the current dollar decline, he said.

Genoe said, however, that Oce's balance sheet remains positive and its interim diviend, which it kept at EUR0.15, should limit the downside to shares.

F Van Lanschot Bankiers cut Oce stock to hold from accumulate, citing weak demand for its products and the effect on the company of dollar weakness.

SNS Securities analyst, Victor Bareno, who rates Oce at hold, said he would consider putting his estimates under review, noting that earlier restructuring measures at the company aren't enough to offset continued difficult markets.

The company has announced 1,350 job cuts this year, as part of a cost-trimming drive.

Oce is the first Dutch technology company to issue third quarter results. It's listed on the Amsterdam Midkap market for medium-sized companies.

-By Neil Moorhouse, Dow Jones Newswires; 31-20-626-0770; neil.moorhouse@dowjones.com; Stefan Simons contributed to this story
Original Post

Add Reply

Post
×
×
×
×
Link copied to your clipboard.
×
×