Barco reports strong growth of 8.4% in sales and 10.7% in orders while continuing efforts to increase profitability

Kortrijk, Belgium, October 26, 2005 – Barco n.v. (Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) today announced results for the three and nine month periods ended September 30, 2005.

Barco CEO, Martin De Prycker, commented: “Sales in this quarter were at the high end of the range anticipated by management. The growth of 8.4% compared to the same period in 2004 is based on growth in all divisions of Barco, with the exception of the division Presentation & Simulation. The BarcoView division and the Media & Entertainment division both grew with about 20% in 3Q05. At euro 11.0 million EBITA was at the lower end of the target range of euro 10 to 15 million. One has to keep in mind, however, that EBITA for 3Q04 was positively affected by other operating income of euro 3.7 million, mainly coming from a Government grant, while in 3Q05 other operating income was euro minus 3.1 million, including euro 2.1 million due to loss on the sale of a building in the USA and bad debt in the Media & Entertainment division.”

Martin De Prycker also commented on the evolution of the gross profit margin: “Gross profit margin declined to 40.6% in 3Q05 from 41.6% year on year and 42.3% in 2Q05. However, gross profit margin is stabilizing or improving on a sequential basis in all divisions with the exception of the Media & Entertainment division, where it remained below expectations. In this division gross profit margin suffered from stock write off on older products and warranty costs on newly introduced products.”

Since growth in orders continued in 3Q05 at 10.7%, Mr. De Prycker said: “We are expecting sales for the fourth quarter to range between euro 195 to 205 million. We also anticipate a further increase in orders within a range of euro 175 to 185 million versus euro 162 million in 4Q04.” He continued by stating that EBITA is anticipated in the range of euro 22 to 27 million before restructuring costs and added: “A restructuring charge will be taken mainly for the reorganization of our sales and service back office in Europe and Atlanta (Ga, USA). This cost may amount to approximately euro 5 million.”

Mr. De Prycker also pointed out that operational improvement actions are showing initial results, and that they will be continued in the next quarters. “We have seen recurring operational costs reduced from 2Q05 to 3Q05. This was partially realized by a reduction in manpower of 54 since end of June.”



CONSOLIDATED RESULTS FOR THE QUARTER

Sales & Orders

Sales for the quarter increased by 8.4% year on year to euro 171.5 million, at the high end of management’s expectations of euro 162-172 million for the quarter. Except for the division Presentation & Simulation that saw its sales decline by 9.1%, sales increased in all divisions: +20.1% at BarcoView, +19.3% at Media & Entertainment, +4.2% in the Control Rooms division and +4.5% in BarcoVision.

Sales to Europe, Middle East and Africa represented 44.9% of consolidated sales, while 37.7% of sales were realized in the Americas and 17.4% in Asia Pacific. These figures illustrate a further positive shift in Barco’s sales to North America and Asia Pacific.

Orders increased by 10.7% to euro 175.9 million, from euro 158.9 million in the year ago period, continuing the growth already seen in the two previous quarters of 2005.


Book-to-bill ratio was 1.03, compared with 1.05 for 2Q05.


Book-to-Bill Ratio

Gross Profit & Margin

Gross profit increased with 5.8% to euro 69.7 million from euro 65.8 million in 3Q04. Gross profit margin declined on a sequential basis from 42.3% in 2Q05 to 40.6% in 3Q05. In 3Q04 gross profit margin was at 41.6%. Gross profit margins remained stable or increased in all divisions of Barco versus 2Q05, with the exception of the Media & Entertainment division. Stock write off on older products and warranty costs on newly introduced products kept gross profit margin below expectations in this division.


Operating Results before Amortization of Consolidation Goodwill (EBITA)

Operating results before amortization of consolidation goodwill (EBITA) decreased by 16.3%, to euro 11.0 million, or 6.4% of sales. This compares to euro 13.2 million, or 8.4% of sales for 3Q04. However, EBITA for 3Q04 was positively affected by other operating income of euro 3.7 million, mainly coming from a Government grant, while in 3Q05 other operating income was euro minus 3.1 million, including euro 2.1 million on the sale of a building in the USA and bad debt in the Media & Entertainment division.

In absolute figures expenses for general & administration expenses, research and development and sales & marketing remained stable compared to the year ago period.


Income Taxes

Income taxes for 3Q05 were at euro 2.3 million compared to euro 2.7 million the year before, so relatively stable percentage wise.


Current earnings per share (operating result before amortization of consolidation goodwill plus interest income/expense divided by the weighted average number of shares outstanding: 12,542,014) for the quarter were at euro 0.68 versus euro 0.87 the year before.


Net Income

Net income for the quarter declined year on year by 3.2% to euro 8.3 million, or a net margin of 4.8%, from euro 8.6 million for 3Q04, or a net margin of 5.5%. Net earnings per ordinary share (EPS) for the quarter were euro 0.68 versus euro 0.70 the year before.

Fully diluted net earnings (12,963,677 diluted shares outstanding) per share were euro 0.65, compared to euro 0.67 in 3Q04.


Evolution of Cash flow

Cash flow from operating activities went up from euro 6.2 million to euro 22.9 million, thanks to improved use of working capital.


Capital Expenditures (CAPEX)

Capex for the quarter was euro 1.8 million. Year to date capex is euro 9.3 million.



CONSOLIDATED RESULTS FOR THE NINE MONTHS

Sales

Sales increased by 4.8% year on year to euro 502.0 million. This was the result of sales growth in all divisions of Barco, with the exception of the Presentation & Simulation division, which saw its sales decrease with 4.9% compared to the same period in 2004.


Gross Profit & Margin

Gross profit at euro 205.3 million was stable compared to 3Q04. Gross profit margin decreased from 43.3% to 40.9%.

Operating Results before Amortization of Consolidation Goodwill (EBITA)

Operating results before amortization of consolidation goodwill decreased by 30.2% year on year to euro 32.9 million. EBITA margin was 6.6% of sales versus 9.9% the year before.

The total expenses for general & administration, research & development and sales & marketing versus sales remained at the same percentage year on year.

Other operating income decreased from euro 5.6 million to euro 0.5 million.


Income Taxes

Income taxes decreased year on year to euro 7.1 million from euro 11.1 million.

Current earnings per share (operating result before amortization of consolidation goodwill plus interest income/expense divided by the weighted average number of shares outstanding: 12,542,014) decreased to euro 2.04 versus euro 3.01 for the first nine months of 2004.


Net Income

Net income decreased year on year to euro 24.9 million from euro 31.2 million in the same period of 2004, a decrease of 20.2%. Net earnings per ordinary share (EPS) were euro 2.03 versus euro 2.54 the year before. Fully diluted net earnings per share (12,963,677 diluted shares outstanding) for the first nine months of the year were euro 1.94 compared with euro 2.40 in the year ago period.



OUTLOOK FOR 4Q05

Management expects sales for 4Q05 to range between euro 195 and 205 million and orders between euro 175 and 185 million. EBITA is expected between euro 22 to 27 million before restructuring costs. These costs will be taken mainly for the reorganization of Barco’s sales and service back office in Europe and Atlanta (Ga, USA). This cost may amount to around euro 5 million.



DIVISIONAL RESULTS FOR THE QUARTER

BarcoView

Sales at BarcoView rose 20.1% year on year, with with an outspoken growth in the Medical market with 44%. Also Avionics saw a healthy increase in sales. In the Defense & Security and Traffic Management markets however, there was a slight decline compared to 3Q04.

The book-to-bill ratio for BarcoView for the quarter was at 0.99. Orders increased year on year with 14.3%. This was mainly due to the 53% growth in orders in the Medical market, while Avionics performed well too. Orders in Defense & Security and in Traffic management were weaker than the year before.

Gross profit margin remained stable at 44.9%. There is pressure on the gross profit margin in the Medical market, due to the higher share in sales of the lower priced product range. EBITA margin was at 10.0% compared to 15.9% in 3Q04. However, 3Q04 EBITA included a one time government subsidy.

A new product range was introduced, which will take Barco also into the mid segment of the Defense & Security market.

Barco Media & Entertainment

Sales grew 19.2% quarter on quarter. The Media market was somewhat weaker in sales than in the same period of 2004, while in the Events and Digital Cinema markets sales grew with 28.0% and 90% respectively. The latter illustrates a growing penetration of digital technology in the cinema theater market.

The book-to-bill ratio for the division was 1.19. Orders for Media were weaker compared to the same period the year before, but prospects are good for 4Q05. Order intake grew significantly worldwide in the Events market. Digital Cinema received good orders in Asia and North America, confirming the positive evolution in this market.

Gross profit margin was at 26.9%, lower than 34% in 3Q04, due to stock write off on older products and warranty costs on newly introduced products. EBITA margin was at minus 3.1%, including the euro 2.1 million due to the loss on the sale of a building in the USA and bad debt.


Barco Presentation & Simulation

The division saw its sales decline with 9.1% year on year. This was mainly due to the Simulation market, while the Presentation market remained relatively flat compared to 3Q04.

Order intake in Presentation was flat compared to 3Q04, but thanks to an increase in order intake in the Simulation market, orders for the division grew with 3.4%. The book-to-bill ratio for the division was 1.06.

Gross profit margin remained stable at 44.2% versus 3Q04, but improved sequentially from 41.7% in 2Q05. EBITA margin decreased to 2.9% from 7% in 3Q04, due to lower sales volumes.


Barco Control Rooms

In 3Q05 sales grew worldwide by a moderate 4.2% year on year. Orders continued on a strong growth path with an increase of 13.8% versus 3Q04. The book-to-bill ratio was 0.99.

At 48.6% gross profit margin was better than in 3Q04 with 42% and 43.5% in 2Q05. This was thanks to strong cost down exercises. EBITA margin improved from 8.2% to 21.0%, thanks to the higher sales volume and a better gross profit margin.


BarcoVision

Sales at BarcoVision increased with 4.5% year on year, whereas order intake decreased with 3.5%. Both orders and sales were weaker in the Textile market, but they were improving in the Plastics and Pharmaceutical markets. The book-to-bill ratio was 1.

Gross profit margin remained stable at 46.6%. EBITA margin was also stable at 8.2%.


Barco Manufacturing Services

Orders and sales were lower than in the same period of 2004, as more outsourcing is done close to Barco’s own final assembly sites in Asia.

Because of lower volumes, EBITA margin declined to minus 5.8%. Operational costs will further decrease by continued reduction in temps.


SHARE BUY-BACK PROGRAM

Barco did not buy back any of its own shares during 3Q05. The company now owns 316,230 of its own shares through a share buy-back program started in 2003.



CONFERENCE CALL

Barco will hold a conference call with investors and analysts on 26 October, 2005, 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 J.P. 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 7.30 p.m. Brussels time (1.30 p.m. EST).



ABOUT Barco

Barco, an international company headquartered in Kortrijk, Belgium, provides visualization and display solutions for professional markets. Barco designs and develops solutions for large screen visualization, display solutions for life-critical applications, and systems for visual inspection. Barco is active worldwide and has its own facilities for Sales & Marketing, Customer Support, R&D and Manufacturing in Europe, North America and Asia Pacific.

For fiscal year 2004, Barco posted net sales of euro 671.9 million, with EBITA margin of 10.7%.

Barco’s ordinary shares are listed on the Brussels/Euronext stock exchange (BAR). 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 “9 months ended September 30, 2005”, 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.

For more information, please contact

JP Tanghe
Senior Advisor to the CEO
Barco nv

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