Later today (at 10am) CFO Kris Hoornaert will host a conference call to update the markets on the effects of the changes in financial reporting on Employee Benefits - IAS19R. Agfa will clarify the amendments on this subject that were provided in the 2011 annual report.
As a result of the changes in the IAS19 standard, Agfa will adapt its accounting presentation as from January 2013. On the profit and loss statement, pension costs will decrease, mainly due to the removal of the amortisation of actuarial gains and losses related to post-employment benefits. On the balance sheet statement, deferred actuarial gains and losses related to post-employment benefits will be immediately recognised in equity. Agfa stresses that thesechanges will have no impact on its pension cash outflows, business flows and current bank covenants.
Conclusion
We will update our model after the call but as these changes will have no impact on its pension cash outflows, business flows and current bank covenants, we expect there will be no impact on valuation. Agfa 4Q12 and FY12 results are on 6 March 2013. We reiterate that Agfa’s 9M12 profits were in line with our and consensus expectations, while revenues were somewhat better than expected. As usual, the company provides no outlook although it has said that the gross margin improvement should continue in the coming quarters. The short-term outlook remains very challenging due to volatile raw materials prices and weak macro conditions, but at the current valuation we believe the company’s challenges are well reflected.
We maintain our Accumulate rating and € 1.70 target.