FIRST HALF RESULTS 2023

Group topline – orders and sales both grew to record levels for the first semester

In the first half of the year, orders increased 6% versus the first half of 2022. This growth was driven by a particularly strong demand in Entertainment.  Order growth in Entertainment and Enterprise was offset by Healthcare, where order intake declined compared to a strong 1H22.  With a positive book-to-bill ratio in 1H23, the orderbook expanded to 505.8 million euro.

Sales grew to 520.9 million euro, a year-over-year increase of 10% and representing an all-time high for a first semester at Barco. Sales growth was driven by both business units in the Entertainment division, and also by Meeting Experience. Sales grew in APAC, Americas and most pronounced in EMEA. In China specifically, sales declined as the recovery in economic activity from the pandemic is taking longer than expected. Within the first semester, after a strong year-over-year sales growth in the first quarter, sales grew at a slower rate in the second quarter as this is compared to a stronger quarter last year, when demand surged after the pandemic.

Division topline – growth driven by Entertainment; Healthcare below last year

The Healthcare division reported lower sales and order intake compared to the record-high levels of the first half of 2022. In Diagnostic Imaging, a normalization of customer investment levels following government-supported spending during the pandemic resulted in a slight dip in order intake levels.  Diagnostic Imaging sales approached last year’s level, while, notably, sales of digital pathology displays grew. Surgical and Modality had a soft start to the year, both in order intake and sales, due to a timing difference between phasing out and phasing in of large contracts, notably in Americas, and higher customer inventories. In all other regions, orders and sales grew in the mid-single digit range.  

In the Enterprise division, order intake increased 4% versus the same semester in 2022, with both business units registering gains.  Enterprise sales were close to last year’s level, reflecting high single digit growth in Meeting Experience offset by a decline for Large Video Walls. Meeting Experience saw growth across all regions, reflecting continued high demand for ClickShare, Barco’s flexible hybrid conferencing solution. Sales declined for Large Video Walls in all regions. Order intake grew both in Europe and APAC but was soft in the Americas where an uncertain investment climate delayed orders. Barco completed its strategic review of this business, with an increased focus on software and workflow solutions; for more information about the strategic review please see the commentary on the Enterprise division’s results in Part 2.

The Entertainment division saw strong growth in orders and sales across all regions, despite weakness in China. Sales grew 43% year-over-year and resulted in a record-high first semester for both Cinema and Immersive Experience. Cinema performed particularly well, reflecting investments by cinemas across the world in the upgrade of their lamp-based projector fleet by state-of-the-art laser projectors of the latest generation.  The growth in Immersive Experience was fueled by live events, and by simulation. Sales conversion for Entertainment improved as production is no longer constrained by the component shortages that impacted results for the same semester last year.

EBITDA expanded year-over-year, driven by significant improvement in Entertainment

EBITDA was 65.0 million euro, up from 46.2 million a year ago. EBITDA margin was 12.5%, which is 2.7 percentage points higher than the EBITDA margin of 9.8% in 1H22, driven by gross profit margin improvements.  

Gross profit margin was 40.9%, up from 37.9% in first half of 2022 and 39.9% in the second half of 2022, largely due to higher margins in the Entertainment division, where last year’s supply chain constraints have eased, and brokerage and logistic costs have declined.

Free cash flow for 1H23 was negative 24.1 million, including 20.9 million capital expenditure, mainly for manufacturing and customer leases. ROCE improved to 18% of sales.

Quote of co-CEOs An Steegen and Charles Beauduin

“We are very pleased that Barco reached all-time high sales during the first half of this year. We delivered on the particularly strong demand in the Entertainment markets. ClickShare continued to thrive on the hybrid conferencing momentum.  As expected, Healthcare results were softer than last year while our perspective on the long-term demand remains strong.   During the semester we completed the strategic review of our Large Video Wall segment and are now implementing changes to our business model and growth strategy to ensure sustainable profitability.  Although the recovery from the pandemic in China is taking longer than expected, we believe in the long-term potential for Barco in this market. We want to thank our teams for their contribution during the first half year and we are going full force for another strong second half.”

Outlook – Reconfirming sustainable profitable growth

The following statements are forward looking on a like-for-like basis and actual results may differ materially.

Sales and EBITDA margin are expected to be higher in the second half of the year than in the first half of the year. We are expecting tempered topline growth due to China, resulting in an expected sales growth for the full year in the high single-digit range.

EBITDA accretion will be maintained. The impact of lower sales is offset by gross margin improvement and a favorable product mix. Management reaffirms its expectation for an EBITDA margin above 14% for the full year 2023.

We reconfirm our long-term guidance for a high single-digit sales CAGR and an EBITDA margin in the range of 14-18%.