The 1999 net income of Océ N.V. from ordinary activities - that is before deduction of exceptional items - amounted to euro 132 million, an increase of 2% compared to 1998. Per ordinary share net income increased by 1% to euro 1.54. After deduction of exceptional items net income amounted to euro 77 million in 1999.
Total revenues increased by 3% to euro 2,838 million. Autonomous growth amounted to 1%. Acquisitions and exchange rate effects each had a positive influence of 1% on total revenues. Digital machines and the related revenues from software and service meanwhile represent 60% of total machines and service revenues (1998: 57%).
Results fourth quarter 1999
Total revenues rose during the fourth quarter by more than 8% to euro 812 million (1998: euro 750 million). Autonomous growth amounted to 1.5%. Exchange rate effects and acquisitions had a positive influence of 5% and 1.5%.
Revenues in Wide Format Printing Systems (formerly called Engineering Systems) rose by 12% to euro 225 million (1998: euro 201 million). Autonomous revenues growth amounted to 1%. The influence of exchange rate effects was 6% positive and that of acquisitions was 5%. The autonomous growth stems from the mid volume printer/copier Océ 9600 and the ongoing growth of the service revenues in line with the increasing population of machines in the market.
In Document Printing Systems (formerly known as Office Systems) revenues rose by 1% to euro 358 million (1998: euro 355 million). Excluding exchange rate effects (5%) revenues were down by 4%. Placements of the Océ 3165 digital printer/copier developed favourably. Revenues from the analogue segment lagged behind under influence of market developments. During the fourth quarter sales to our distribution partner in the United States gradually recovered.
As a result of increasing competition margins were under pressure.
Facility Services showed strong growth.
In Production Printing Systems (formerly named Printing Systems) revenues rose by 18% to euro 229 million (1998: euro 194 million). Autonomous growth amounted to 12% and exchange rate effects positively influenced revenues by 6%. Both sales of network printers and those of high volume printers showed strong growth, with machines sales and service and software revenues also developing excellently.
Operating income rose by 1% to euro 77 million (1998: euro 76 million). As a result of the increased price competition in Document Printing Systems the margin was under pressure. The operating costs rose moderately and lagged behind the increase in revenues.
Net income before exceptional items rose by 1% to euro 44 million (1998: euro 44 million) and amounted to 5.4% of revenues (1998: 5.8% of revenues).
Cash flow before exceptional items (net income plus depreciation) increased to
euro 96 million (1998: euro 89 million).
Based on the weighted average number of ordinary shares outstanding of euro 0.50 nominal each before exceptional items, net income remained the same at
euro 0.52 (1998: euro 0.52) and cash flow increased to euro 1.13 (1998: euro 1.07).
The exceptional items resulting from the restructuring, which were charged to the fourth quarter of 1999, amounted to euro 55 million.
Results 1999 financial year
In the market for Wide Format Printing Systems Océ booked total revenues of
euro 782 million, an increase of 1%. After deduction of acquisitions and exchange rate effects, revenues decreased by 2.5%. Despite the stagnating revenues Océ maintained its leading position. After the strong increase of the number of placements of the successful Océ 9800 during the past years, these placements lagged behind slightly during the past year. The complete version of the Océ 9600, destined for the medium volume, became available in the fourth quarter, as a consequence of which Océ was still unable to derive full benefit from the demand. In the autumn a more powerful version of the Océ 9400 was introduced. In the growing but competitive market for Display Graphics Océ is building a good position for itself with inkjet printers and relating supplies. The digital machines and the related revenues from software and service meanwhile account for 71% (1998: 70%) of total machines and service revenues.
In the market for Document Printing Systems Océ's revenues increased by 1% to euro 1,298 million. This increase was a result of exchange rate effects. In the highly competitive digital segment of this market Océ achieved a large number of placements of the Océ 3165, though these revealed a faster than expected decline in the analogue segment. Both these developments have brought pressure to bear on prices and margins and hence on profitability. In the meantime a number of measures have been taken to achieve cost reduction in manufacturing, service and logistics and this should largely compensate for the pressure on margins. In terms of printing and copying volume Océ's market share grew right across the board. The digital machines and related software revenues amounted to 29% (1998: 25%) of total machines and service revenues. In Facility Services Océ booked an increase of 34% in total revenues, both in the United States and in Europe. The continuing expansive growth, which will also involve greater emphasis on consultancy, will cause revenues to increase further.
In the market for Production Printing Systems revenues increased by 9% to
euro 759 million, of which 1% was the result of exchange rate effects. Océ improved its strong global position in this market. Océ underlined its technological leadership in the high volume market yet again. This applies to both printing systems based on continuous-feed paper as well as to cut-sheet systems for high volumes. Furthermore Océ offers in combination with machines a large series of applications for the production and processing of documents. In the fast growing segment of Printing & Publishing, which focuses on Printing-on-Demand, Océ's revenues doubled. In line with ongoing digitisation Network Printing Systems showed a growth due to new printers, servers and software.
Operating income rose by 1% to euro 248 million (1998: euro 245 million) and financial expense (net) decreased by 3% to euro 59 million (1998: euro 61 million). Net income before exceptional items amounted to euro 132 million, an increase of 2% and amounted to 4.6% of revenues (1998: euro 129 million and 4.7% of revenues). Cash flow (net income plus depreciation) before exceptional items increased to euro 319 million (1998: euro 300 million). Based on the weighted average number of ordinary shares outstanding of euro 0.50 nominal each, net income before exceptional items
increased by 1% to euro 1.54 (1998: euro 1.53) and cash flow before exceptional items with 5% to euro 3.80 (1998: euro 3.62).
After deduction of exceptional items net income amounted to euro 77 million, which is equivalent to euro 0.88 per ordinary share outstanding.
Balance sheet at November 30, 1999
Total assets rose by about euro 296 million to euro 2.9 billion. This rise is mainly the result of increased financial leases and rented machines. Shareholders' equity plus minority interests after income appropriation amounts to euro 860 million, which is 29.5% of the balance sheet total (1998: euro 766 million and 29.2%). This is mainly a result of income retained (+ euro 57 million) and exchange rate effects
(+ euro 47 million).
Dividend
It is proposed to distribute over the 1999 financial year an unchanged dividend of euro 0.50 per ordinary share of euro 0.50 nominal. This means a final dividend of
euro 0.35. It is proposed to make the final dividend available optionally either fully in cash, or fully in shares, charged to the (tax-free) share premium reserve or, if desired, charged to the income over 1999. The dividend in shares will be determined on March 29, 2000 (after close of trading on Amsterdam Exchanges, ex-dividend March 13, 2000) and will be subject to a discount of at most 5% as compared to the cash dividend. The newly issued shares will be entitled to dividend as of December 1, 1999.
Prospects
Océ is on track in handling the market shift from analogue to digital. We aim to become one of the leading companies in supplying integrated document solutions in professional environments. The present range is competitive and new products and services will be added to it in the year ahead, thanks to ongoing innovation and new partnerships. In addition, we will continue to build up digital know-how and specific organisations for the growth markets. The programme that has been initiated to strengthen and expand the company as a supplier of digital products and services, together with the current extensive cost-reduction programmes, which are aimed at countering the pressure on prices and margins, is expected to result in an increase in total revenues and income. In view of the market situation, provisional expectations for the new financial year are that the growth in revenues and income will be limited.
General Meeting of Shareholders
The Annual General Meeting of Shareholders will be held on March 9, 2000.
Amongst others the following proposals will be submitted to shareholders:
- to adopt the dividend for 1999 in line with the above proposal;
- to accept the resignation as Executive Director of Mr. H.J.A.F. Meertens with
effect from October 1, 2000 upon reaching the age limit;
- to accept the re-appointment as Supervisory Director of Mr. L.J.M. Berndsen.
The annual report will be published mid-February 2000 and will be available on the Internet (www.oce.com) as from February 7, 2000.
Océ N.V.
February 2, 2000
