UPDATE 3-Agfa's Q2 profit down as silver, dollar weigh
(Updates after news conference, changes dateline, previous BRUSSELS)
MORTSEL, Belgium, July 30 (Reuters ) - Belgian imaging technology group Agfa-Gevaert (AGFB.BR) reported a 31 percent fall in its second-quarter operating profit on Wednesday, below expectations as a weak dollar and high silver costs weighed.
The economic slowdown in the United States and Britain and a delay in launching a new healthcare product also had an impact.
The company, which specialises in hospital imaging and top-end printing, said recurring earnings before interest and tax (REBIT) dropped to 38 million euros ($59.79 million).
The average forecast in a Reuters poll of seven analysts was 42 million euros.
Agfa shares were down 0.62 percent at 4.79 euros at 1025 GMT, the fourth worst performer on Euronext Brussels. Analysts said the company had again come up short.
"Agfa is doing a good job in reducing operating expenses, but this is insufficient to offset lower sales and raw materials impact," KBC Securities wrote in a morning note.
Agfa, formerly a photographic company, said sales fell by 8.1 percent to 777 million euros against the average forecast of 813 million euros. Net profit was 3 million euros, versus 42 million a year earlier and the average forecast of 7 million.
Agfa repeated that graphics sales should be stable in constant currencies in 2008 and healthcare's down as a rise in digital sales failed to offset the decline of its traditional film and print business. The materials business should grow.
"The sum of those is that you probably have a slight decline," Chief Executive Jo Cornu said.
It said general costs should fall by about 100 million euros this year, including 30 million euros due to currency effects.
"Furthermore, Agfa-Gevaert strives to lower its net financial debt to a level below 650 million euros by the end of this year," the company said.
Agfa suffered from an 18 million euro spike in raw material costs, mainly due to rocketing silver prices XAG=, the 16 percent slide of the dollar against the euro. About half of Agfa's sales are dollar-denominated.
It has also struggled with internal difficulties, notably rising costs in healthcare and a technical hitch that has hindered the launch of its new inkjet printers.
The delayed upgrade of healthcare's picture archiving and communication system had a 10 million euro impact, Agfa said.
A fall in first-quarter operating profit prompted Agfa to scrap its plan to separate into three listed companies and concentrate instead on improving the existing business.
It is still examining options, which include allowing a third party to take a key shareholding in a business, notably the healthcare division. Cornu said he was receiving constant feedback from bankers Lazard.
"There have been better periods in history to make a transaction," he said.
Disappointing results, with declining cash flow, have sparked debate about the financial health of the company.
A restructuring plan announced in 2006, under which 2,000 jobs have already been cut, is supposed to reap cost savings of 250 million euros by this year. (Editing by Greg Mahlich)
