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Introduction & Market Context
Agfa-Gevaert NV (BR:AGFB) presented its Q1 2025 financial results on May 14, 2025, revealing a mixed performance that highlighted the company’s ongoing strategic transformation. The Belgian imaging and IT company saw its stock price fall by 3.33% following the earnings release, as investors reacted to the combination of stable EBITDA but declining overall sales.
The company’s performance reflects its strategic pivot toward growth engines while managing the decline of mature businesses. This transformation comes amid challenging market conditions, particularly in China’s medical film market, while the company sees promising momentum in healthcare IT and specialty chemicals segments.
Quarterly Performance Highlights
Agfa-Gevaert reported stable Group Adjusted EBITDA of €2.1 million (0.9% of sales) in Q1 2025, a slight improvement from €1.7 million (0.7% of sales) in Q1 2024, despite a 3.2% decrease in overall sales to €242 million.
As shown in the following chart summarizing the company’s Q1 2025 performance:
The company’s performance varied significantly across divisions. The breakdown by division reveals how growth engines are beginning to compensate for declines in mature businesses:
The improved business mix is clearly contributing to the company’s ability to maintain EBITDA despite sales challenges:
Detailed Financial Analysis
Agfa-Gevaert’s gross profit margin improved to 30.7% in Q1 2025 from 29.9% in Q1 2024, despite the sales decline. Operational expenses decreased by 2.7% to €81 million, reflecting the company’s cost control efforts.
The following profit and loss statement provides a comprehensive view of the company’s financial performance:
Free cash flow was negative at €27 million, largely driven by an increase in working capital. The following chart breaks down the factors affecting cash flow:
Divisional Performance
HealthCare IT emerged as the standout performer with a 63% increase in 12-month rolling order intake and a 12.0% increase in sales to €57 million. Adjusted EBITDA for this segment surged by 288.1% to €5.0 million, representing 8.8% of sales.
The following chart illustrates the strong performance of the HealthCare IT segment:
Digital Print & Chemicals also showed positive momentum with a 5.8% increase in sales to €97 million, driven primarily by the Specialty Films & Chemicals business. Adjusted EBITDA more than doubled to €2.3 million.
As shown in the divisional breakdown:
In contrast, Radiology Solutions faced significant challenges with a 15.6% decline in sales to €73 million, primarily due to the contraction of the medical film market in China. This resulted in an Adjusted EBITDA of -€4.5 million, down from -€0.8 million in Q1 2024.
The following chart shows the performance decline in the Radiology Solutions segment:
Strategic Initiatives
CEO Pascal Juéry emphasized that the Q1 results validate the company’s strategic transformation, stating, "The strategy works and the growth engines are delivering." The company continues to invest in three key growth engines: HealthCare IT, Digital Printing Solutions, and Green Hydrogen Solutions.
For HealthCare IT, the company reported that 15% of Q1 2025 order intake came from cloud deals, while 29% came from net new customers. The segment also achieved top customer satisfaction with a Net Promoter Score above 50.
In Digital Printing Solutions, despite soft demand in the Sign & Display market due to economic uncertainty, ink revenue increased by 16%, and the company has several important product launches planned for 2025.
The Green Hydrogen Solutions segment faces a contrasted market picture, with mainly small projects passing through Final Investment Decision. However, ZIRFON continues to be the product of choice in alkaline technology, with growing interest in Asia. Construction of a new ZIRFON plant with 20GW/year capacity is on track.
Forward-Looking Statements
Looking ahead, Agfa-Gevaert expects its growth engines to continue performing strongly in 2025. The company anticipates continued momentum in HealthCare IT order intake and projects growth in both top line and profitability for Digital Print & Chemicals.
However, the company also expects the declining trend in sales and profitability to continue for Radiology Solutions. The Green Hydrogen market is projected to recover by 2026-2027, according to management commentary.
Regarding potential tariff impacts, the company provided an assessment of various scenarios, noting that most potential changes would have a neutral to positive impact on its operations.
In conclusion, Agfa-Gevaert’s Q1 2025 results demonstrate progress in its strategic transformation, with growth engines beginning to offset declines in mature businesses. While challenges remain, particularly in the Radiology Solutions segment, the company’s focus on high-growth areas appears to be yielding results. Investors will be watching closely to see if this strategic pivot can deliver sustained profitability improvement in the coming quarters.
Full presentation:
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