Barco meets 1Q04 sales and profit targets despite 14% lower US dollar year on year with EBITA margin at 10.3%

Kortrijk, Belgium, 28 April , 2004 – Barco n.v. (Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) today announced results for the three-month period ended March 31, 2004.

Barco CEO, Martin De Prycker, commented: “We are pleased we met our targets despite the 14% weakening of the USD. If the USD had remained stable, sales would have increased by 5%. EBITA remained relatively unchanged versus 1Q03 while the EBITA margin increased slightly. Excluding the impact of currency fluctuations would add euro 1.2 million to EBITA. Order levels evolved positively, with an increase of over 4% at constant exchange ranges.”

“We anticipate sales for 2Q04 to range between euro 160 and 170 million, which means 8% growth year on year at constant exchange rates and 4% at the anticipated USD/euro rate of 1.23. EBITA is expected between euro 17 and euro 22 million, or a growth by 10% versus 2Q03.”


CONSOLIDATED RESULTS FOR THE QUARTER

Sales

Sales for the quarter remained relatively unchanged year on year at euro 149.2 million, in line with management’s expectations of euro 147-155 million. Sales increases of 37% at Control Rooms and 78% at Media & Entertainment offset declines of 7% at BarcoView and 34% at BarcoVision. Euro 2.4 million of the decline at BarcoVision is due to the deconsolidation of the Machine Vision Business Unit in the middle of 2003.

At constant exchange rates, sales would have increased year on year by 5.1%.

Sales to Europe, Middle East and Africa represented 52.5% of consolidated sales, while 29.2% of sales were realized in the Americas and 18.3% in Asia Pacific.

Orders fell by 2.5% to euro 153.9 million, from euro 157.9 million in 1Q03. This was a result of the 14% weakening of the US dollar and related currencies against the euro. At constant exchange rates, orders would have increased by 4.3 %. Order levels were weak in January and February, but picked up strongly in March, continuing into the second quarter.

The book-to-bill ratio was 1.03, compared with 1.05 for 1Q03.

Book-to-Bill Ratio

Gross Profit & Margin

Gross profit was euro 65.9 million, which is 1.2% lower than in 1Q03. Gross profit margin remained stable year on year at 44.1%.


Operating Results before Amortization of Consolidation Goodwill (EBITA)

EBITA remained relatively unchanged year on year at euro 15.4 million and in line with management’s expectations of euro 13 - 17 million. Excluding currency fluctuations, EBITA would have increased year on year by 7.8% to euro 16.6 million.

General & administration expenses declined year on year as a percentage of sales by 5% to 7.6% of sales, whereas sales and marketing costs increased by 5.7% to 17.2% of sales from 16.1% in 1Q03, reflecting continued investment in market coverage in North America and Asia.

Other operating income improved to euro 2 million, from euro 1.5 million, due to currency fluctuations.


Income Taxes

Income taxes decreased to euro 3.9 million from euro 4.3 million year on year as a result of an effective tax rate of 24.5% for 1Q04 compared with 27.2% for 1Q03. Despite the lower tax rate of 1Q04 the company expects the effective tax rate for the full year 2004 to be somewhat higher than for 1Q04.


Current earnings per share

Current earnings per share (operating result before amortization of consolidation goodwill plus interest income/expense divided by the weighted average number of shares outstanding) for the quarter increased to euro 0.97 from euro 0.93 for 1Q03.


Net Income

Net income for the quarter improved by 2.6% to euro 10 million, or a net margin of 6.7%, from euro 9.8 million for 1Q03.

Net earnings per ordinary share (EPS) improved year on year to euro 0.81, from euro 0.79. Fully diluted net earnings per share were euro 0.76, compared with euro 0.74 during the same period.


Capital Expenditures (CAPEX)

Capex for the quarter was euro 7.8 million, including euro 4.2 million for the construction and expansion of BarcoView’s plants in Belgium and Georgia, US. For full year 2004, management expects capex of approximately euro 30 million, also including the construction and expansion of these plants.

OUTLOOK FOR 2Q04

The following statements are forward looking and actual results may differ materially.

For the second quarter of 2004, Barco expects to achieve sales of between euro 160-170 million. This means 8% growth at constant exchange rates and 4% growth year on year at an anticipated USD/euro rate of 1.23.

Assuming the value of the US dollar is in line with the anticipated USD/euro rate of 1.23, operating result before amortization of consolidation goodwill (EBITA) is expected to be between euro 17 and 22 million. This would mean a 10% year on year growth.


DIVISIONAL RESULTS FOR THE QUARTER

On 1 January, 2004, the division BarcoProjection was split in three new divisions: Barco Media & Entertainment, Barco Presentation & Simulation and Barco Control Rooms. Beginning this quarter the company has begun to provide financial and operational data for these three new divisions.


BarcoView

Sales at BarcoView declined by 7.5% year on year. Strong sales volume to the Medical market confirms Barco’s market leadership in the PACS market, while deliveries in the Defense and Traffic Management markets were weaker than in the previous year. Delivery of LCD panels requires constant attention, although the risk of delays in deliveries has been mitigated by diversifying the supplier base.

Whereas orders in Defense & Security were weak compared to 1Q03, orders in Medical and Traffic Management remain at high levels, continuing into April. The book-to-bill ratio was at 1.05.

EBITA margin down to 13.1% versus 17.3% in 1Q03 due to lower sales volume. Gross margins remained stable at 45% versus 46% in 1Q03.

During the quarter Barco introduced Visona, an integrated display and controller for Traffic Management.


Barco Media & Entertainment

Sales of this newly created division increased year on year by 77.7%.

The Events market performed well worldwide, while the Media market recorded high sales in Europe.

Order levels for the Events market were good, underscoring the successful integration of Folsom. Acquired in the beginning of January, 2004, Folsom has already started to produce worldwide synergies in sales.

The book-to-bill ratio for the division was at 0.88. The weak USD resulted in strong pricing pressures in the Media market in both the U.S. and Asia. Digital Cinema presents positive signs that support the start of the digitalization of the cinema market in 2005.

EBITA margin for this new division was 5.5%, a year on year improvement from
– 11.6% as a result of good profitability following higher sales volumes, but still below target because of further investments in Media and Digital Cinema.

During 1Q04 the first outdoor 22 mm LED walls were manufactured in China by Barco Leyard.


Barco Presentation & Simulation

Sales at the Presentation & Simulation division dropped by 17.3% versus 1Q03.

In the Presentation market indirect sales were weaker, but there was a refocused approach of Barco’s direct sales force towards niche markets like education, hotels & conferences, museums and corporate markets. Within Simulation, civil aviation remains weak and some projects have been postponed for 2Q04. The museum and planetarium markets however, performed well.

The high 1.10 book-to-bill ratio is supported by a good order intake in Simulation and Edutainment with notable successes in the North American and European market. The car design market also did well in 1Q04.

Lower sales volumes resulted in a decline in profit margin to 5.7 % from 15.9% in 1Q03.


Barco Control Rooms

Control Rooms posted good sales growth in its various markets, with a particularly strong performance in Traffic & Surveillance. China, India and Korea experienced high growth, while sales to the European market recovered during the quarter. Total sales for the division grew year on year by 37.3%.

Orders increased compared with 1Q03 levels, and the backlog grew following a book-to-bill ratio of 1.04.

EBITA margin was 10.7% versus 3.3% in 1Q04.


BarcoVision

BarcoVision sales for the quarter exclude Machine Vision, the Company’s former food sorting business unit, which was divested and deconsolidated as of July 31, 2003. The 27% year on year decline in sales, excluding Machine Vision sales from 1Q03 sales, illustrate the continued low of the textile cycle. Sales remained weak in January, picking up in February and March but still below the levels recorded during the upswing of the cycle.

Book-to-bill ratio at BarcoVision was at 1.12.

Gross profit margin remained stable year on year at 44%. EBITA margin improved to 12.1%, from 7.6% in 4Q03 driven by higher sales.



CONFERENCE CALL

Barco will host a conference call with investors and analysts on April 28, 2004, starting at 4.30 p.m. Brussels Time (10.30 a.m. EST), to discuss the results for the quarter. The call will be hosted by the Company’s CEO, Mr. Martin De Prycker, Mr. Antoon Van Petegem, Chief Financial Officer and JP Tanghe, President Corporate Communication and Investor Relations.

An audiocast of this conference call will be available on the Company’s website www.barco.com at 10 p.m. Brussels time (4 p.m. EST).



ABOUT BARCO

Barco is headquartered in Kortrijk, Belgium, with a network of subsidiaries, distributors and agents in almost 100 countries. Barco designs and develops solutions for large screen visualization, display solutions for life-critical applications, and systems for visual inspection. For fiscal year 2003, Barco posted net sales of euro 629.0 million, with EBITA margin of 11%.

Barco’s ordinary shares are listed on the Brussels/Euronext stock exchange. Share information may be accessed on Bloomberg under the symbol BAR BB and on Reuters under BARBt.BR. Barco is a BEL 20 and a Next 150 company.


For more information and the full report “3 months ended March 31, 2004”, please visit the Company’s website at www.barco.com


The accounting information taken up in this press release has not been reviewed by the statutory auditor


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For more information, please contact

JP Tanghe
Senior Advisor to the CEO
Barco nv

Telephone +32 56/26 23 22
jp.tanghe@barco.com