October 21, 2020
09:08
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The imaging group Barco saw sales shrink by 37 percent in the past quarter due to the pandemic. Management warns of a clearly lower profit margin for the whole of 2020. The share is 10 percent lower in Brussels.
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The West Flemish imaging group Barco
has had a bad summer. Turnover fell by 37 percent to 167.4 million euros. That is a lot worse than analysts had anticipated. They counted on an average of 205 million euros.
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‘At the moment it is clear that 2020 will be a leap year for Barco,’ says Barco CEO Jan De Witte. An ‘off-year’, it says English-language press release.
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At the moment it is clear that 2020 will be a leap year for Barco.
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Even versus the second quarter – which you would think was the absolute bottom due to the global lockdowns – the company registered a 2 percent decline in sales.
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While the Entertainment (screen technology for cinema and events) and Enterprise (technology for control rooms and the Clickshare conference tool) divisions made a slight recovery, the third Healthcare division failed completely.
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Healthcare, specialized in screen installations for operating rooms, was nevertheless seen by analysts as a buffer in times of crisis. “Healthcare showed weaker results as a result of delays in deliveries that were adjusted in line with the hospitals’ changed spending priorities,” it said.
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Lower margin
Management also sounds anything but positive about what’s to come. The fact that the number of new orders fell by 43 percent in the past quarter also suggests little good.
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The company is counting on ‘continued pressure on sales given the uncertainties linked to a second wave of covid’.
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And the profit margin for the full year will ‘drop significantly’ compared to the first half result. As a reminder, in the first half of the year, the margin already fell from 14 to 10 percent.
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Analysts expected a margin of more than 11 percent for the whole of 2020, but that forecast is clearly due for revision.
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Cinemas and Clickshare
The stock has already lost about half of its value this year. Barco had a much harder time than the Bel20, which is 17 percent lower than at the beginning of this year.
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That must be a bit of a swallow for CEO Jan De Witte and main shareholder Charles Beauduin. Last year, the tech company made an impression thanks to its Clickshare meeting tool. But Clickshare revenues have been under pressure since the pandemic outbreak. Presentations became webinars and meetings became Zoom meetings.
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In addition, the events and cinema sector, a major market for Barco displays and projectors, is going through a huge crisis.
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Major events have been banned by the pandemic. And the people stay away from cinemas because of the mouth mask duty, because of the lack of top films or because of fear of being infected. Cineworld has even closed all its halls in the US.
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The short-term outlook is weak, but the long-term opportunities have become greater for Barco compared to before the pandemic.
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The Berenberg stock exchange responds to the quarterly report and sees opportunities for investors in the long term. “The short-term outlook is weak, but the long-term opportunities have become greater for Barco compared to before the pandemic,” said Berenberg.
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The stock exchange refers to future demand in the medical domain, the growth of video conferencing and the disappearance of Sony as a competitor in the cinema market. ‘Barco has a strong balance sheet, and the company is still profitable. We recommend making use of the currency weakness. ‘
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