Hello and welcome to the Agfa-Gevaert 2024 results conference call. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand you over to your host, Mr. Pascal Juéry, CEO, to begin today's conference. Thank you.
Thank you very much, operator, and good morning, and welcome to everyone attending the call. I'm sitting here in Mortsel with our CFO, Fiona Lam; my colleagues from the Executive Committee and Viviane Dictus, in charge of Investment Relations. And we are going to walk you through, Fiona and I, our Q4 and year-end results before opening to questions first in the room and then to the analysts and the press on the phone. So let me start by saying, well, to make a long story short, I think Q4 and also 2024 is showing actually record results for the three growth engines of the group, HealthCare IT, Digital Printing Solutions and ZIRFON, all had record years and record Q4 quarter where we've seen an acceleration of the growth.
And I would like to note that indeed, we are a company with a strong seasonality because we are generating 43% of our EBITDA in Q4 actually, and that stems from the business seasonality, especially in HealthCare IT and also in the businesses where we have equipment sales involved like DPS, Digital Printing, but also, in fact, DR in radiology. Q4 is of critical importance, and I believe you've seen that we did a record Q4 for all the growth engines. At the same time, we're also addressing the challenge of the other part of the company. I was reading this morning in the De Tijd, "A Tale of Two Companies." We are one company, but with distinct, indeed, activities. The film decline has accelerated in 2024.
We have put in place a transformation program to address this state of the market that is now ready for implementation, and I'm going to come back with more details on this. Overall, Healthcare IT had a record Q4 and a fantastic year where we launched our cloud solutions successfully, and where customer satisfaction and order intake are the best, I would say, testimony to our successful, profitable growth strategy in the business. DPS also had a very good year, boosted by the growth engines of DPS and ZIRFON. Radiology, of course, was strongly impacted by the decline, especially that we've seen in the medical film market. DR is still growing and growing very nicely, Digital Radiography, but cannot make up for the decrease in the film. That's a bit the key messages I would like to convey for the year.
Now if I turn to numbers and look at the sales, well, Q4, a nice growth compared to last year. But again, a tale of contrast where you've seen significant still decrease in radiology during the quarter and 8% growth in HealthCare IT and 15% growth in DPC. If you look at the full year, it's pretty much the same trend, except that, in fact, Q4 has shown an acceleration of the growth, but the trend is still there, a significant decrease of our film activity, offset by a significant increase in DPC. The decrease for the full year of HealthCare IT stems really from, I would say, lower-margin businesses, namely hardware and is testimony to the market moving partially to the cloud, in fact.
Meaning our customers, some customers, stopped buying hardware in anticipation of their move to the cloud, and it has a short-term impact. If I look at EBITDA, again, same as sales. For the full year, you've seen very nice growth of DPC and Healthcare IT and a steep decrease for radiology. If you look at Q4, the trend is even amplified, actually. In fact, most of the growth has been accelerating for growth engine for the year. One comment, the radiology situation and the film is being addressed through our transformation program. However, getting in place of such a program means there was almost a very limited impact in 2024. The impact will really start in 2025. We are bearing the weight of this decrease fully in 2024, actually.
Now, if I take a step back and look at the past five years, which is, I think, extremely important for a company like us in full transformation, you see the direction of travel. You see the tale of, yeah, I mean, the film business, but here it is not only the film business, but our chemical business and our DR business, a spark of this gray bar as well. You see a decrease, 3% decrease CAGR, your average in the past five years, while our growth engines are going 9% in the same period. I would tend to tell you that actually the growth has only accelerated in the past two years, actually. If you look at EBITDA, you see the same story of the transformation of the company.
In 2020, most of the profitability of the group was related to the film. It has decreased significantly in the past five years, while we were growing actually the growth engines. These five years are not equally created. Of course, we've seen an acceleration of this trend in the past couple of years as we have put in place all the elements of success for the growth engines in the earlier years of the plan. Now we can start seeing some of these benefits.
I also want to jump immediately on our transformation program for the film. Let me tell you, it's not only a cascading exercise that we are doing in this transformation program. We are also changing the way we work. We are stepping up our operational excellence projects and we are considerably changing the way we operate the plan. The good news is we have a social plan signed and agreed with our social partners.
I have to say, it's also testimony of the ability we have to work in full partnership with all stakeholders. We did it without any conflict or any day of strike, which was not a given given the size of what we are undertaking in this program. We confirmed the EUR 50 million-plus recurring cost savings impact. It will start kicking in in a significant way in the second part of the year. The time to implement, we are just starting actually now to implement. I confirm it's a cash-accretive program. Restructuring costs, we told you that we were estimating about EUR 50 million. In fact, it is EUR 32 million in our P&L, a little bit more in terms of cash, EUR 37 million.
As you see, the expected cash out is pretty well spread out for the next years, which is also one of the reasons we can be cash-accretive for the program. Very pleased with the plan. We are now in implementation phase and will give you a regular update of where we are. I'm going to turn to you, Fiona, to comment on the P&L.
In terms of the P&L, the numbers, sales and top line and bottom line, Pascal of course already highlighted quite a lot. You've heard them already now. Thanks to the growth engines stepped up in both top line and bottom line, you see largely compensating actually the fixed cost coverage losses we have in radiology. You see our gross profit is relatively stable. That's good to see that we have been able to keep our gross profit percentage at stable like the year before, even though we have lost quite some volumes on the top line on the total year level. Also with the good cost control of our operating expenses, basically with the inflation, we were able to reduce it to EUR 1 million, keep the full years also quite stable.
You see we post a decent, let's say, adjusted EBIT and EBITDA level for 2024 with the top line that we have lost. Of course, cannot avoid that the volume impact still has certain bottom line EBIT impact as well.
If you go from the adjusted EBIT to the operating result before tax, there we have quite a significant amount of adjustments on restructuring and one-off non-recurrent business. This is expected, largely the EUR 65 million in Q4 related, like Pascal said, EUR 32 million to the restructuring, which we were planning, expected. It's actually good news because it's lower than what we originally thought of as a cash-out item. We also know already in advance with the acceleration of radiology, we would have to reevaluate the impairment of the fixed assets of radiology, which is not a cash-out item, but we know we need to do that for our balance sheet. So we have impaired radiology largely, all the dedicated assets, EUR 24 million in Q4. Those are the biggest items of the postings of the EUR 65 million in Q4.
Plus, of course, we also still have some smaller ones like Germany. We managed to actually announce to close down the sites in the radiology areas as well. We also booked a EUR 5 million closure of that site for Germany and some other, etc. The financing cost is quite stable. We have been quite stable compared to last year. There are no major incidents or expectations. We are not going up or going down, so it is quite relatively stable. That led to our net financial result still with a loss of EUR 75 million. On the free cash flow, Q4, like EBITDA was the 43% of the year. Free cash flow for Q4 at Agfa is also extremely good. You see we have EUR 35 million positive free cash flow, largely driven by good positive EBITDA results, but also significant reduction of our working capital in Q4.
That has led to a positive free cash flow of EUR 35 million. Unfortunately, if you look at the full years, we still had minus EUR 46 million. You see we have a good reduction in Q4 on the working capital, but compared to 2023, we still are slightly higher than what we needed in 2023. We have a build-up working capital of EUR 18 million. Some of them are also related, of course, in the Q4. Higher sales that you led to a higher advance receivable. Good thing is that a big part of this consumption of the cash is the conscious planning on the CapEx investment for the growth of the future. You see in the year, we still have planned EUR 45 million investments. Large part of that, of course, is also the CapEx investment on the sites here in Mortsel.
We have, of course, continued to invest in the IT infrastructure, some of the energy sustainability investments as well on the energy side. You see we have still quite a large CapEx investment, which we invest for the future of the business. We have also a positive contribution on the provision orders of EUR 16 million, which is linked largely to our strategy going forward for our Agfa Finance strategy, which used to have in the past financed the, let's say, long-lease customers. It is acting like a leasing company for our customers. This strategy does not fit our current strategy anymore. We actually would amortize and try to phase out this strategy. In the coming years, it would have a positive impact actually in the coming years, every year in this magnitude of amount.
If that's all, the rest are stably, like what we have expected, pension cost of EUR 44 million, which is every year, roughly at this number every year, we're reducing these by EUR 2-3 million of expense on the cash out on the pension side, etc. We have the restructuring adjustment cash flow of EUR 21 million on those. That led to minus EUR 46 million of the three years. That also means we have now a net financial debt ending position of EUR 37 million. The leverage is still very, very healthy, is 0.7 versus investment governance of 3, also on the interest of governance of 13.3 versus a minimum of 5. One good news also to mention is on the pension status. You see we have here, you see the material countries of the material five countries overall have reduced by EUR 51 million.
At the group level, total have been reduced by EUR 53 million at the end of 2024, meaning we have actually a good reduction of EUR 51 million on the SSIs of our pension versus our liability, and therefore the net pension has been reduced by EUR 51 million on the material countries. Next is the division result.
Yeah, I take it back from here. Healthcare, Healthcare IT. Have you seen, and I already touched on it, for the full year sales slightly below due to the transition to the cloud, actually. For me, the highlight of the result is really the order intake, plus 32% versus last year. At the end of Q3, we gave it for plus 20-25, and we ended up at plus 32. It is illustrative today of the real momentum we have in the market, and clearly due to the customer satisfaction and the image of Agfa in the market, which has been totally turned around, I would say. One good news, and in this order intake, also the good news is it is cloud-related for about a little bit less than 30%. All of this increase is coming from net new customers.
I mean, when we have net new customers representing all of this increase of 30%, it means we are getting share. We start getting share, which is totally new for us. It's a total turnaround of where we were, I would say, a few years back. Also, a very good indicator is recurring sales are growing, actually, even if total sales are not growing. This is also a testimony, two things behind it, testimony to the shift to more and more recurring revenue model, of course, but also due to the fact that we are not losing any customer anymore. We have an SMA volume that is remaining constant. It's a combination of the two. The EBITDA, in spite of the sales top line decrease, is actually improved due to the fact that indeed the sales we lost were rather lower margin sales.
The progress we made is in higher value services. To make a long story short, as you can see, also illustrated by the margin percentage which continued to increase. A rather good year. As far as leading indicators are concerned, really excellent momentum for the business. If you look at the P&L, that pretty much illustrates what I just said. We continue to be very conscious regarding our operational expenses. Gross profit is increasing. Yes, the transition to the cloud has an impact for us in terms of revenue recognition and margin recognition. It delays the revenue recognition and the margin recognition. I would like to remind you that if I sell EUR 100 million in project sales, pretty much it is going to be in my sales the next year.
If I sell EUR 100 million of subscription models, I will have EUR 20 or EUR 25 in my next year of sales. Okay? It has this condition as an impact. Today, we have a growth momentum that probably means we won't see such a dip. It will just limit our growth in the next years. All these being excellent news for the business, because turning project revenue into recurring revenue is very stable.
Overall, for the numbers, if I go to the next slide. Really, really pleased by the year. I mean, it's a record profit number. It's a record order intake. We never had so much order intake in a year. Records are made to be broken. I'm sure we'll do even better in 2025.
I'm very confident it's going to be the case when I look at the dynamism of our commercial pipeline today. Cloud view, 27%. Remember that 2024 was the first year where we were offering cloud solutions, and it's already a very sizable part of our future business. Net new customers, as I told you, for the first time gaining share, meaning now we have still two-thirds project business and 34% recurring business in our order intake. What I'm probably the most proud of is really the customer satisfaction. The way we have improved in the class ranking, which is based on customer feedback, is unprecedented, actually. Unprecedented. For the first time ever, we have three best-in-class awards in the U.S. The first two are elements of our Enterprise Imaging Systems that are being recognized.
The third one is actually a transversal award for the full Healthcare IT industry. It is testimony to the progress we have made in our product with our customers, must improve software. The features that we have been implementing are working extremely well in the market, and that is recognized. I am very happy with Healthcare IT, stellar performance, and I am very confident going forward. DPC, also a very good year, 7% top line growth. Of course, DPC is like a Prolaxa . Not everything is growth-oriented in DPC. If you look at the growth rates of our growth engines, 13% in digital printing and 27% in ZIRFON. We deliver what we said we were going to deliver.
Even in a rather subdued volume environment for ZIRFON, and we'll come back to that in a couple of slides, we still are able to increase our sales significantly and also our bottom line, actually. For DPS, double digit growth, we are fully delivering on our strategy. I mean, the Inca acquisition works. We have made a number of launches that were successful in 2024, and Inca are increasing plus 15%. We are outgrowing the market in DPS, and we are basically doing what we told you we were going to do. When I look at the DPA, you see therefore a significant progression for DPC. DPC and Healthcare IT are competing for the highest absolute EBITDA number in the group, but I think we will continue to see in 2025 a strong growth of this nature for DPC.
We have everything it takes to be successful. If I turn to the P&L, you see that the growth also has accelerated during the year. Meaning the growth of Q4, which is the most important quarter for us, is plus 14.7%, while the growth of the full year is 7%. The growth has accelerated during the year, which is normal due to our product initiatives, in fact, and also the EFI partnership that took place more in the second part of the year. We keep our operational expenses under control. Actually, with the growth, the percentage on sales is decreasing steadily. The EBITDA number is not yet where we would like it to be, but we are making significant progress. If I turn to the news on DPS, why are we successful in this market?
First, we are very active with our innovation, and we are launching new printers that have received a very good welcome in the market. Every time we launch new printers, these are larger, more productive, more industrial printers. There is also an improvement in the mix of what we do. We have grown everywhere except for the Onset. The reason being, we are renewing the Onset for next year. It was a kind of a transition period before the relaunch that we are forecasting for 2025. EFI partnership works very well. We are very happy. Ink growth is exactly where we wanted to be. Plus 15%, it means we're going to double our business every five years in inks. We are also, as you know, made progress on SpeedSet.
I think the beta situation at our customer in the U.K. is working well, and we expect to finalize actually the sale of the beta in the next, at least in the first half, and see. Of course, we are confident that we'll do also our first sales of SpeedSet during 2025. We have announced, actually, a couple of days ago, the signing of our formal agreement and partnership with BHS, by which we are going to supply print engines for their corrugated lines, a monochrome one, a black one, if you want, and a polychrome one. We will also have the ink opportunity regarding this partnership. That's also testimony to, I think, the fact that we are recognized as one of the leading players in the digital world. These jet liners are actually, I would say, the fastest digital printers in the world.
We continue also to gain market share in water-based decor. Decor is not a market that is very favorable for the time being, but digital is taking really the technology place of the future, and we expect the growth to firm up in the next year. Green hydrogen, maybe here a few comments. In any situation like that, we are living a bit the sobering moment from the hype of hydrogen two to three years ago to the reality of the market. It is a normal process that would happen in any such innovation like green hydrogen. Globally, the number of new investments is decreasing, meaning the announcements for new projects are decreasing in terms of trend. Reversely, the number of FIDs, so Final Investment Decisions, is increasing. It is a contrasting trend. The first one is really the announced projects.
When you look at the sum of announced projects, it's an extremely high number, more than 1,000 gigawatts. The FIDs is what we need to look at in order to make sure that we have a market reality on that. Actually, it's encouraging to see that investment decisions are increasing. Geographically, we see different dynamics, and it's clear to say that Middle East, Africa, Asia are moving faster than Europe. I think Europe has also a tendency to regulate and, until everything is absolutely clear in terms of regulations, it slows down a bit the development of hydrogen. For us, it's not an issue. We have a global presence, and that's the point.
We are coming also to a time where we have a number of electrolyzer producers, and this market in this environment will probably rationalize or consolidate on a fewer number of large players. For ZIRFON, we continue to be doing very well against this market backdrop of volume, I would say, where the volume increase is probably not what our customers expected. We are going 27% in 2024. We are extending our customer base. We are selling now in Asia. We had another, I think it's from Norway, right? It's a partner as well. We have also set up now, a few months back, a lab to continue innovating with new versions of ZIRFON, and we have promising stuff in our pipeline. Of course, the construction of the plant is on track. Radiology, radiology, much more contrasted, of course.
Here on the left-hand side, you see minus 10% overall for the division for full year 2024, but in fact, it's minus 16% for the film, and it's plus 8% for the DR business. Very contrasted also within radiology. The impact on the film is quite tremendous in terms of volumes. Remember, this is before we are implementing our transformation program. We do not have yet a necessary adjustment in the cost base showing in these numbers, and that is what we are working on. If you look at the P&L, same story [audio distortion]. There was a bit of noise on the line [audio distortion]. Can we get all the good news? Hello? I think we are back online. I'm sorry for the interruption. We just do not know what happened. Sorry.
I was about to comment on the P&L of Radiology Solutions, and I would say, as you've seen, we've been very busy also adjusting our expenses to the reality of the market, but not yet with the transformation program for the plant. Therefore, we had a significant impact on the volume decrease for film for the time being, and that's really the objective of the transformation program. If I look at our business, I think I already said the main element. We are also taking care of the CR, I would say, end-of-life technology. We have also announced the shutdown of a German plant where we were making CR components at the same time. We are addressing the declining part of the business. Reversely, DR is still growing, and we are, I would say, outgrowing the market.
The way we do it is actually we provide more and more AI-based and software-based innovation to the market, and that proves to be quite successful. We already had the strong imaging software with MUSICA, but today we are complementing this software with solutions that are embedded right at the point of care for our radiology solutions. I think this is the way forward, and we are receiving a very good response from the market with this approach. For radiology, I am going to go now to the Outlook 2025. To make a long story short, we expect the strong performances of the growth engines to continue in 2025. Of course, I am saying that this outlook is based on the current economic environment.
I think everybody knows that the environment has become a little bit more volatile since the end of January, of course, and therefore we have a little bit less view on some of these elements. For us, we are staying the course, and per division, as I told you, the momentum in order intake is expected to continue in 2025. Probably our guidance when I say our performance is expected to be roughly in line with last year might be a bit conservative, but I'm cautious uniquely as what I explained to you, meaning the impact on the going from more project to cloud project, which is just delaying some revenue and margin confirmation. I think we are still in an excellent position in this area. DPC, we will continue to grow as you've seen in 2024, both in DPS and in green hydrogen solutions.
Even if the growth of hydrogen solutions do not expect a spectacular volume improvement, that is not going to be the case. We will continue to grow our business and to improve our bottom line. Radiology Solutions will be stable. We still believe that the decrease in the market will continue, but we will be able to mitigate it through our transformation initiative. One thing where, unfortunately, we have not made any progress is we have been expecting the results of the expertise for AURELIUS discussion regarding the purchase price agreement. We have been now eight months in the process. Unfortunately, we have no lever on the expert, which is an independent expert, and we are still waiting for the results. In spite of our numerous actions to follow up on that, we still do not have it.
I already discussed extensively about the transformation program on the film. Overall, we are going to address the film decline in a very significant manner with our transformation program, and we expect the continuation of the growth of our growth engines. Just a word on sustainability. We have committed to science-based target initiatives in terms of CO2 reduction in line with SpeedSet 55 program. We will remain committed to this program, of course. DEI, it's about inclusivity. We will continue to work on that. The idea is, even if we are on meritocracy, we need to make sure we work on inclusiveness and for everyone to have a chance, the same opportunity in the company. We will continue to do that. Also working on the representation of gender in the company and, of course, safety programs.
Safety programs, I have to say that this is the second year in a row where we are decreasing the number of accidents by about 15%, and we expect to continue making progress in the same way for the next years. Last but not least, we are actively working, of course, on the CSRD reporting for sustainability for this year, even if it's a significant commitment in terms of resources, I must say. It is quite a complex set of measures for a company our size, given the number of activities we have, but we are actively working on it. I am going to stop here for Q&A, and I will first take questions from the room. Again, we are really on track to succeed across transformation, and the success we've seen in the growth engines is the best testimony of this.
While at the same time, we are not shy to manage our declining business needs through cross-sections. Turn it to Alexander.
Yes, hello. Alexander from Kepler Cheuvreux. Based on your order intake, it seems that the order book in HealthCare IT is up with about 30%-40% year-end. You highlight the excellent momentum in HealthCare IT with higher sales and incurring revenue, which has already become a sizable part of the American U.K. So I'm a bit confused as to why you guide for a stable performance in 2025. Could you clarify the altitude, please?
Yes. Just because the nature of the order intake has changed. Again, if I was in a project base, you could roughly say that whatever you take in order intake for the year N will be revenue recognized in the year N plus 1. Okay?
What you take in 2024, you will recognize in the year N plus 1. It is not anymore the case. When you recognize the sale, you recognize the margin, and therefore the EBIT. If you have now a recurring project, instead of putting this project, this order intake as sales, it will be spread out five, six, seven, eight years, depending on the length of the contract. Meaning that mechanically, the way you recognize your profit is also delayed. Going from a project model to a subscription model has a mechanical impact to delay revenue and margin recognition. If we were in an environment where we were not growing, actually, you would see sales decreasing significantly and EBITDA decreasing significantly before during the transition years. It is not the case here due to the fact that we are growing.
We can make up this mechanical effect due to the fact that indeed our order intake growth is significant. Still, it means that all your growth, you will not get it in one go. You will get it spread over many years. This is the reason why we are guiding. Typically, what you see in a business making a SaaS transition is a sales dip and a profit dip for 2-3 years. That is not what we are saying with our growth. We say we believe it will be at least at the same level. I say maybe I am a bit cautious or I have a cautious outlook. Already by doing that, believe me, it means that we are able to do that just because we have significant growth in the order intake.
How much growth do you actually expect in 2025 for Silicon?
Because you mentioned the number of investments is up threefold or the decisions at least. I'm wondering whether we should take that as a guide.
No, no, no. You will not take it as a guide that we are going to multiply our business by three because there is a timing impact. That's all. What's your growth of the year for 20?
Yeah. In 2024, we grew by close to 30%. I think in 2025, we should see something that will be in the same order of magnitude. It will not be massively more than what we believe. We do believe that the market will pick up more than that, but it will be in 2016 to 2017.
We see now bigger projects being announced and companies again starting to look at real projects, I'd say, not just high-level dreams, but it will indeed come forward for the coming years.
There is a bit of a maintenance question, and then I'll leave the floor to my colleagues. Because there seems to be a slight change in reporting as you didn't include tax exchange rates this year. Considering the dollar was rather strong at the end of the year, I could only mention that the FX was positive, but maybe you can clarify how the FX impacted it.
Viviane, Fiona, I don't know who wants to.
Actually, it was a very full-year basis, a very minimal effect, and that's why we didn't explicitly mention it anymore. Yeah, it was minimal, not material in the numbers.
Okay, thank you.
Okay.
He's Hipscape, he's Securities [Foreign language].
I do not want to spoil the party, but can you give us on the division by division and impact of potential U.S. tariffs? What's your U.S. exposure division by division and what could be impacted by tariffs?
Yeah, of course. Of course, Keith. First, it's a bit difficult for me to comment because it seems to be changing quite rapidly and on a frequent basis. The area where we are exposed is mainly because we have a Canadian plant for three years. Okay? This is one plant that supplies the world and, of course, North America. We are exposed in this geography. We also are working on contingency plans. We have also a plant in the U.K. where we also assemble printers, and we could imagine to use the U.K. plant as a backup.
This being said, there is no talk of tariffs for the U.K. for the time being, but that could come tomorrow. We'll manage according to what we see, but this is really the one specific exposure that I can point out. Now, things are complex to understand. Also, we might have positive impact, for instance, for DR because actually some of our competitors are doing DR equipment from China. If they want to go to the U.S., they have business. For the time being, we don't from Europe or the countries where we operate. I'm very cautious because it could change tomorrow. It's a little bit difficult to say.
I don't think at the end of the day this specific impact for me of duties is more about the impact it has on the market itself, meaning in such uncertainty, we people are not making CapEx equipment decisions. They say, "I'm going to wait a bit to understand what's going to happen in the market." For me, what worries me is, of course, the direct impact of the duties, but we have ways to mitigate it. It's more about the impact on the market and the decision-making by customers. As a head when you run a business, I mean, you need stability in order to make a CapEx decision. For the time being, I'm not sure the situation is stable, so to speak. This is really the one area that we need to look at.
You used the word China for the first time in this conference call. After 45 minutes, I have to look at the transcripts over the last 15 years. I think it's the first time that China is not mentioned that much. What's your situation in China in Radiology Solutions?
I think, yeah, I was about to say the situation in China. I mean, when we are talking about the decrease of the medical film market, that's mainly China. That comes mainly from China, which is normal because basically China is more than 50% of the world market for film. The situation we are seeing in China is actually a market decrease due to some digitalization initiatives in China. Yes, I do mention the word China in the call.
Last question from my side is on the printing division. BHS, you mentioned ink opportunity.
Can you quantify that a little bit on a per device, yeah, per year? What is the potential? On the SpeedSet, you mentioned that the beta will be sold probably in the first half of this year. What is the number of targets for this kind of machines on a full-year basis?
How many machines do we plan selling? Okay. In BHS?
Sure. On BHS, maybe a comment there. These machines, these are big machines. They take a long time to install. It is not like, let's say, our bigger sign and display printers, you are talking one to two weeks installs. On these bigger sign and display printers, bigger, sorry, single-pass printers, you are talking certainly for betas, several months. Over time, they should go down to maybe six weeks or so.
Clearly in the first period, we will see equipment sales before we actually start seeing, let's say, substantial ink sales. We are indeed the preferred ink partner for BHS, but these will be open systems. We will not be the only ink supplier, but for sure, we're one of the certified and preferred ink suppliers. I would say we will see in 2025 mostly equipment effects. You will see as of 2026 also the ink starting to ramp up. Maybe talk about, let's talk about the potential. These machines are consuming a lot of ink, actually. The monochrome machine will be not using so much ink, but still it's substantial. It's quite much more versus one of our own sign and display printers. You're talking somewhere between 2,000-10,000 liters of ink.
It is actually quite a big spread because you can imagine if you do an Amazon box with just a little bit of black on it versus a lot more on a box that you will print a lot more. On full-color systems, you will typically use up to 100,000 liters of ink per machine. Those are typically boxes that you print at least 50%, if not 100% of the box with full images. There is quite a big gap between a monochrome printer. Imagine an Amazon box on which you do a small print versus a full-color box.
Competition there is on the Fuji?
There is actually limited competition today. HP has a machine in the market that we consider as a competitor. I would say that the BHS machine is actually a first of its kind. For the inks, for the ink? Not potentially.
We were talking,
I think, on BHS as you are not?
We are not the exclusive supplier. The question of me is, who are we competing against?
Today, we are not competing against. BHS can, of course, choose to, they have certain other partners that they work with, but I cannot give you all the names of the people they are working with. It is actually not potential.
These are smaller companies. When all this was done, when it was Inca, not Agfa, Inca did not have ink. Now we are coming to this game, and part of the partnership will give us also access to a significant portion of the ink consumption.
Thank you. Good morning. Maximus Kranach, ING. A couple of questions on my end as well.
Firstly, if I look at radiology, obviously, EBIT of EUR 1 million, if I recall correctly, for the full year. Could you elaborate a bit on the trends in between medical films on the one hand and direct radiography on the other? I would presume that medical films is in negative territory, but just a few on that. Firstly, then just for my understanding, can you remind me who capitalized R&D U.S. in Agfa Healthcare and what to expect for next year as well? Finally, I'm going to do like this for it to spoil the party a bit. Looking at the offset and the divestment, we were talking about EUR 28 million. I think that's been two years already that we're talking about this. Any view on timing, certainty, priority of success? Anything you can share on that? Thank you.
Okay. Capitalize R&D. You have the number on top.
We are capitalizing about EUR 6-7 million. EUR 6-7 million. It is part of the acceleration that is also showing our ability, by the way, to have a grade in our product quite rapidly, and it will stay at the 7. No change. Regarding your question on radiology, I am not disclosing actually the profitability for the various parts, but there are three components in radiology, CR, which is end of life, the film, and DR. Actually, film, no, it is not money losing. It is not losing money, even in the situation we are in today. And ORBIS, we are still talking about the same amount. There is no change. It is just that we do not have yet the report by the expert. Nothing has changed. The work is just not being done today by the experts. Okay? Nothing has changed. The changes seem to have not changed.
Our assessment has not changed at all. We are diligent in trying to make sure the expert is working on the file, but there is so much we can do. It is a joint, I would say, assignment with AURELIUS and Agfa. I would say, unfortunately, we have no lever on the expert, as it should be, by the way, as an independent expert. I still expect the situation to resolve during the year, but I am extremely cautious because, frankly speaking, to have already an eight-months period for our expertise is way too long, so to speak.
Follow up on this. You do not have a specific date on which it was available, I suppose. I presume same way we are doing on IT or whatever. You always have a deadline that you need to abide by.
There is no, we have no deadline obligation by the expert. It's up to the expert to define the time they need to come up with the results.
Yeah. Thank you.
Ben?
Yeah. Hi. These guys already asked most of my questions, but I wanted to stand still at offset again. Sorry. Just trying to get an inkling of do you have an idea on what's taking so long? Is it workload at the expert's office, or are there other things at play? Do you have any idea? I do not. You do not? I do not. And they do not offer an explanation because it's getting quite strange for us as outsiders to see as well.
Besides, there is a restriction because of independency that we are also restricted not to approach her too much. We have to wait for the status, and we are basically not like a normal situation where we can discuss timeline and deadline.
We are not allowed to approach also too much because of independency.
Does AURELIUS share your annoyance at the timeline, or?
Because it's a bit different. They have to pay us cash, so they are not in a hurry. No, no. It's a bit unbalanced in this story because basically, of course, for AURELIUS, it's okay to wait and not to pay us what is due. Of course, it's very unbalanced.
Maybe one more very general question. You have discussed on the transformation not being a straight line. Do you have an indication on when it does become a straight line, when the fluctuations kind of erode?
In real life, you do not have straight lines. I do not think it does exist, but I think the direction of travel is there. You have always variation according to various events.
I think when I look at the mega trend, is green hydrogen going to be developing? The answer is yes, we absolutely need it. Is digital printing growing? This is the one growth technology in the printing market, and it will develop. And IT, I mean, our solutions are absolutely well in tune with market expectations and the ability to actually process more people in a more cost-effective way in a healthcare system. In each of these businesses, in ZIRFON, we have a market reference for the membrane for alkaline process. In DPS, in where we play, we are a leading player in the growth so that we have this testimony to that. In IT, today, we have put back ourselves totally top of mind in this market.
Therefore, we are enjoying not only the growth of the market today, but probably some share gain as exemplified by the order intake. Now, it's never a straight line, and you cannot say, "Okay, I'm going to grow every quarter by 8%." There will always be variation along the line, but the direction of travel is clear.
On ZIRFON , is there any change in competition? And can you give us already an indication on how the capacity constraints are evolving? The factory? Competition.
Competition.
I mean, it's clear that with the market that was honestly not there three years ago and that is now starting to develop, there is also competition on the horizon. That being said, like I was saying, we keep on being the reference supplier. We also are not sitting still. We continue to invest in innovation.
Together with our key customers and partners, we continue to invest in developing the next-gen membranes.
Except for, let's say, the Chinese players and the one Japanese player that we know, are there other important names popping up?
No. No, actually not. There is indeed competition popping up in China already for quite some time. Some absolutely not successful, some a bit more successful, but not to the level of innovation that we have. Also operationally, I think we certainly have a head start with our plant and the new plant we're building. In terms of your second question on bottlenecks, our plant is still due for being started up this year. There will be certainly, with the market growth as it is today, more capacity constraints.
On our side.
On our side. That's for sure.
Did we address your questions?
Yes, on this one.
Yeah. Maybe question on the phone? I know Laura is a—
Indeed, indeed. We have a question coming from Laura Roba calling from the Degroof Petercam . Please go ahead.
Good morning. Thank you for taking my questions. I have two. First of all, coming back on Healthcare IT, based on your order book, do you have any visibility today on when this higher order intake will translate into higher sales? Are we talking two years, five years? I don't know. And then how should we look at the CapEx evolution for this year?
The CapEx evolution, you said? Okay.
Yes, for this year.
Yeah, yeah. I believe on healthcare IT, actually, we are planning for 2025 to see already an increase in sales, actually. Relatively modest due to what I was explaining in terms of going from a project model to a subscription model.
We will already be growing the top line, we believe, in 2025. Again, it is due to the fact that we have high growth in order intake, even if we delay the revenue and margin recognition due to the subscription model. Yeah, I mean, we are expecting we will probably grow in 2025. CapEx this year was, you have seen it, EUR 44 million. We expect about EUR 10 million less for 2025.
Thank you.
There are no further questions, so I will hand it back to the floor to conclude this conference. Thank you.
Thanks very much. Thanks for attending the conference. Again, I want to repeat, our strategy is well in place, demonstrated by the successful run of our growth engines. I think we made the right choices, and we are operating the businesses have been improving the way we have been operating these businesses and their performance. We are absolutely committed to address the situation we see on the film market to preserve the profitability of this business for Agfa in the years to come through our transformation program. The execution is really starting after the successful agreement we have in place with our social partners. Thanks very much, everyone, and have a good day.
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