Barco Nv Unsp/Adr

Good morning, ladies and gentlemen. I am Willem Franszoo, I'm Director of Investor Relations at Barco. We welcome you today to this conference call on the results of the second quarter of the year and the half-year results, 2023. Today with me here on stage are Ann Stegen, Co-CEO of Barco, and also Anders Sender, CFO of Barco. Co-CEO Charles Baudouin is currently on medical leave and would like to be excused for this call. On Stegen and on the sender will now walk us through the half-year results. And the update under the heading 10% sales growth fueled by strong performance of entertainment, step up in profitability with EBITDA margin at 12.5%. They will provide extra color on the results using the earnings presentation, which is available on our website since this morning. And that's it for the introduction. We'll take it from slide three onwards in the executive summary. Anstegen, the floor is yours.

So we reached a top line sales of 521 million, which is a 10% year-over-year growth. And also for Barco, this means an all-time high for the first semester. This growth was mainly fueled by a very strong performance in the entertainment business unit. We also saw 60% of our revenue coming from eco-labeled products, and that was mainly driven by the enterprise division, where we have now a complete portfolio of click share eco-labeled, and also the new LED series that we brought on the market are eco-labeled. We have a positive book-to-bill, larger than one, and that results in a solid order book of 506 million. EBDA landed at 65 million. That represents an EBDA margin of 12.5%, up 2.7 percentage points year over year. That was mainly related due to a very good product mix, also higher gross profit margins. because we clearly see an eased supply chain situation, and that then offsets, of course, the impact from higher inflation rates and our continued investments. Net earnings, net income, we landed at 33 million, which represents 6.4% of our sales. So for the outlook, we are reconfirming a sustainable, profitable growth. We expect now a high single-digit sales growth year over year because of a tempered top-line growth in China, where we see the post-COVID recovery slower than expected. EBDA accretion is maintained, and we reconfirm an EBDA margin of larger than 14% for the full year 2023.

I'm sure there we are. Good morning to everybody and thanks for the introduction. Taking over with some figures and then I'll give the mic back to you for the color on the different divisions, etc. Starting here on slide four with the overview of the financial KPIs and in comparison with the first semester of last year, you will see that the change or the equation is all in the green, which we of course all like. Double digit sales growth, you will see later on also we have an increase in sales in all of our regions, some lower in APAC, 5%, so they are not the double digits, and this including the lower sales growth in China. Order book at 506 million, which is compared to the beginning of the year, 9 million higher. EBITDA margin really fueled by the extra on gross profit margins which we did, so on average we sold our margins at better gross profit margins, but also different actions we did on our costs which also helped on this gross margin. We see an increase in gross profit margins compared to the first semester of last year with three percentage points up, but also one percentage point up compared to the second semester of last year. So we really see a steady improving in that area. OPEX has been contained, there is an increase linked to a half inflation and then also further investing both on product roadmap and commercial activities. Free cash flow we landed at minus 24 million, including in there a step up of our capital expenditures, more on that later on. Our ROCE landed at 18%, net income as indicated at 33 million, which is about 11 million higher than last year. Taking it over to slide 5, there we see a comparison of our sales versus the first semester of last year and then the splits by division and the split in the different regions. Last year you might remember that when we came out at this point on our sales of the first semester, that there was a material impact of supply shortages, which was primarily hampering at that time entertainment. That was to the tune of about 40 million we at that time also included in our figures and results outlook. This has been fully solved towards the end of the mid-year last year and was largely resolved in the second semester and is out of the door and no issue anymore in the first semester which really helped to deliver on the big order book which entertainment had and with that a very very solid growth year over year in entertainment and this in both business units underneath. Enterprise landing close to last year, which is a high single-digit growth of MX and a lower growth of large video walls. And healthcare, more on that than later on, the impact that it had landed at 10% lower top line than last year. All in all, bringing that to 10% growth. Looking to the different regions, then EMEA, the highest, plus 15% year-over-year. Americas, 8% year-over-year. And APEC, 5% year-over-year. Some extra, then, little footnote we added on that. If we look to the impact of the currencies in this first semester, then that has a neutral impact. So call it no help, neither an excuse, I would say. But that's neither needed. Moving over to the typical bridge which we each time share with you on our operational results comparing the EBITDA of the first six months of last year to this year and this is then the shape of a P&L which we all like to see, the one of profitable growth. So the increase of operating results really helped by our sales improvement extra volumes which we sold at better margins and then OPEX which has been contained with the impact of inflation which is about the half of the amount which you see there, the half of the 20 million and that the other half is investments done in product portfolio and commercialization. landing with that at an EBITDA of 12.5%. The EBITDA of the different division lands at 10% and higher. Net income, some words on that, starting from our EBITDA accretion, then the other lines between EBITDA and net income. Depreciations and amortizations are a little lower than last year. We do have a restructuring cost. We booked this first semester to the tune of 6.6 million, which is containing or is linked to the strategic review we did on large video holds and more on that a little later. Taxes and our effective tax rate remains at 18%, which is the same as last year and also the guidance for the full year. And with that, we land at our net income of 33 million, 11 million higher than last year. Moving over to free cash flow and our balance sheet, which remains very strong as you know it. The investments or the negative free cash flow includes an increased gross operating cash flow. It includes an uptake in our capital expenditures and the 21 million, about 10 million is related to the cinema as a service contract and half relating to what we call manufacturing investments and manufacturing footprint. The working capital is still high and too high and is a focus point to, as we announced before, to get that down. That started to get down and primarily we are talking here about inventories as of the second quarter, but compared to the beginning of the year, not yet. These are good inventories, as we then also call them, so they do not trigger extra write-offs on it. So in that sense, that's a temporary thing to secure the supply, last time buys, which are in their service inventories, etc. And also linked, of course, to the uptake of our sales, then in particular in entertainment. Our ROCE landed at 18%, which is a very nice increase compared to last year, and our net cash ended above 200 million, 203 million, which is 61 million lower than the beginning of the year, including the free cash flow, but actually the capex expenditures, which we did, and also in a full cash dividend we paid to our shareholders. On sustainability KPIs, the first one Ann already indicated. So half year, 60% of the products of our revenues is including products which has an equal label A or better. Last year this was 50% and the target for the full year is 70%. We see an improvement across the different divisions, so that's very nice. If you look to the new product introductions, which we did in the first half of this year, they all have an eco-label A or better, so that's also really on track over there. If you look to another one, the net promoter score on our customers in the field of communities, then also there we see a nice increase, 48%. Target is 50% for the full year, so working to get there, but a very nice improvement over there. And there we see this also across the regions and across the divisions. And with that, the pleasure to give it back to Anne for more color on the division.