Second quarter results show continued order and sales growth and strong improvement in EBITA versus first quarter

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

Barco CEO, Martin De Prycker, commented: “This quarter we continued the positive sales trend with a sales growth of 3.1%, which would have been 5.5% at unchanged exchange rates. Some markets did extremely well, especially medical, control rooms and media. In 2Q05 order intake reached the highest level since 4Q03, resulting in a book-to-bill ratio of 1.05, thus increasing the order book and indicating a further outlook for growth in sales throughout the year. EBITA of euro 15.5 million is within the anticipated range but was positively impacted by the sale of buildings and negatively by restructuring costs.”

“The cost improvement actions on our products started last year and the further relocation of our high-runner products to low-cost countries in Asia is starting to generate the anticipated gross profit margin improvements. With a gross profit margin of 42.3% we are still below the 44.1% of 2Q04, due to a changing product mix and pricing pressure in some of our markets. However, there is a clear increase already versus the gross profit margin of 1Q05 of 39.6% thanks to cost improvements and the impact of the volume. On the operational cost side we reduced manpower by sixty compared to end March 2005 and further reductions are expected by early retirement programs and reduction of temps.”

Regarding the outlook for 3Q05, Mr. De Prycker, said: “With orders between euro 170 and 180 million we expect an increase in order-intake around 10% for 3Q05. Sales are expected to be between euro 162 million and 172 million, which would mean a year-on-year growth of 5 to 6 % at the middle of the range. For EBITA we put forward a range between euro 10 and 15 million.”


CONSOLIDATED RESULTS FOR THE QUARTER

Sales & Orders
Sales for the quarter increased by 3.1% year-on-year to euro 176.9 million, well in line with management’s expectations of euro 170-180 million for the quarter. At unchanged exchange rates, sales would have grown with 5.5%. Three of the five core divisions increased their sales, while sales at BarcoVision remained stable and the Presentation & Simulation division saw a decrease.

Sales to Europe, Middle East and Africa represented 50.3% of consolidated sales, while 30.3% of sales were realized in the Americas and 19.4% in Asia Pacific.

Orders increased by 3.9% to euro 185.6 million, from euro 178.6 million in the year ago period.

The book-to-bill ratio was 1.05, compared with 1.04 for 2Q04 and 1.12 for 1Q05.


Book-to-Bill Ratio

Gross Profit & Margin
Gross profit decreased 1.2% to euro 74.8 million from euro 75.7 million in 2Q04. Gross profit margin was 42.3% versus 44.1% in 2Q04. This decrease is due to changing product mix and pricing pressure in some of Barco’s markets. On a sequential basis, there was a clear increase from the 39.6% gross profit margin in 1Q05, thanks to cost improvements and higher sales volumes.


Operating Results before Amortization of Consolidation Goodwill (EBITA)
Operating results before amortization of consolidation goodwill (EBITA) decreased by 16.9%, to euro 15.5 million, or 8.7% of sales. This compares to euro 18.6 million, or 10.9% of sales for 2Q04. In 2Q05 however, EBITA was impacted by the following elements: minus euro 2 million restructuring costs, minus euro 0.6 million cash re-evaluation due to increased INR exchange rate and plus euro 1.3 million profit on the sale of buildings in the UK.

Research and development expenses slightly went down year-on-year, while there was an increase of 6% in sales & marketing costs and of 12% in general & administration expenses. These increases are mainly due to the increase in sales staff in the second half of 2004 and higher investments in IT.

Income Taxes
Income taxes decreased from euro 4.6 million to euro 3.4 million year-on-year.

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 were at euro 0.96 versus euro 1.18 the year before.


Net Income
Net income for the quarter improved sequentially from euro 4.9 million in 1Q05 to euro 11.7 million in 2Q05 or a net margin of 6.7%. In 2Q04 net income was 12.6 million, however, after deduction of euro 1.8 million goodwill amortization

Net earnings per ordinary share (EPS) for the quarter were euro 0.95, down from euro 1.03 in 2Q04 (after deduction of goodwill amortization). In 1Q05 net earnings per ordinary share were euro 0.40. Fully diluted net earnings per share were euro 0.90, compared to euro 0.96 in the year ago period (after deduction of goodwill amortization).



CONSOLIDATED RESULTS FOR THE SIX MONTHS

Sales
Sales increased with 3.1% year-on-year to euro 330.5 million, a growth coming from all core divisions except the Presentation & Simulation division, the sales of which decreased with 2.8%. The most outspoken growth was in Control Rooms with 14.5%.


Gross Profit & Margin
Gross profit decreased with 4.2% year-on-year from euro 141.6 million to euro 135.6 million. Gross margin decreased from 44.1% to 41%, reflecting the changing product mix and pressure in some markets.


Operating Results before Amortization of Consolidation Goodwill (EBITA)
Operating results before amortization of consolidation goodwill decreased by 35.5% year-on-year to euro 21.9 million. EBITA margin went down to 6.6% from 10.6% the year before.

Expenses for research & development remained stable year-on-year. General & administration costs and sales & marketing costs increased compared to 2Q04, mainly due to increased sales staff added the second half of 2004 and increased investments in IT.

Other operating income increased from euro 1.9 million to euro 3.5 million. Main reasons are the sales of buildings in the UK and the Netherlands and currency effects.


Income Taxes
Income taxes decreased year-on-year to euro 4.8 million from euro 8.5 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) decreased to 1.36 versus euro 2.14 for 1H04.


Net Income
Net income decreased year-on-year to euro 16.6 million. In 1H04 it was euro 22.6 million, after deduction of 3.7 million goodwill amortization. Net earnings per ordinary share (EPS) were euro 1.35 from euro versus euro 1.84 (after deduction of goodwill amortization) for the first half of 2004. Fully diluted net earnings per share for the first half of the year were euro 1.27 compared with euro 1.72 (after deduction of goodwill amortization) in the year ago period.


Balance Sheet
At the end of 1H05 Barco had a net debt position of euro 16.8 million, compared to a net cash position of euro 32.7 million at 31 December 2004. In 1H05 euro 25.3 million was paid in dividend and euro 4.2 million was spent on the share buy-back program. Accounts receivable were high at euro 173.7 million, due to the high volume of shipments in June 2005. Inventory increased to 167.8 million, mainly because two divisions switched to a new ERP system on 1 July and they have built up some special inventory to avoid delivery problems in July. Furthermore, for the medical market a second supplier of LCD panels was introduced, which also resulted in additional inventory. Capex for the first half of 2005 was euro 7.5 million.

OUTLOOK FOR 3Q05
The following statements are forward looking and actual results may differ materially.

Management expects orders for 3Q05 between euro 170 million and euro 180 million, compared to euro 158.9 million in 3Q04.

Sales for 3Q05 are expected to range between euro 162 and 172 million, versus euro 158.1 million in 3Q04. Assuming sales at the middle of the range, this represents around 6% year-on-year growth.

EBITA is expected in the range of euro 10 to 15 million, versus euro 13.2 million the year before.



DIVISIONAL RESULTS FOR THE QUARTER

BarcoView
Sales at BarcoView rose 5.4% year-on-year, with continued strong sales growth to the Medical market reaffirming Barco’s market leadership. Deliveries in Defense & Security were lower than the year before, which was also the case for Traffic Management.

The book-to-bill ratio for BarcoView for the quarter was at 1.1, with a significant increase in orders in the medical market compared to the one year ago period. Following Le Bourget Airshow, Avionics too had a strong order-intake. Orders remained weak in Defense & Security, while they were also lower in Traffic Management, where an increased price pressure was noted.

BarcoView had a stable gross profit margin year-on-year, although the introduction of a second LCD supplier for medical displays had a negative impact on gross profit margin and also resulted in a temporary inventory increase. Sequentially, the EBITA margin increased to 9.8% from 7.8% in 1Q05, remaining lower though than the 13.5% of 2Q04.


Barco Media & Entertainment
Sales remained virtually stable year-on-year, as on the one hand sales in Media more than doubled while in the Events market sales were weaker, reflecting last year’s EURO 2004 Soccer Championships and the Athens Olympic Games which triggered special demands. Digital Cinema sales increased over 50% compared with 2Q04.

The book-to-bill ratio for the division was at 0.92. Orders in the Media market were strong worldwide, while they were weaker in the Events market. The recently announced partnership with Kodak in the Digital Cinema market will strengthen Barco’s position in North-America.

Gross profit margin was 34.5%, which is lower than in 2Q04, but an improvement sequentially. This is thanks to focusing on higher gross margin products and on cost-down for Media products manufactured in China. EBITA margin strongly increased to 5.9% in 2Q05 from – 2.3% in 1Q05, resulting from higher sales, better gross margin and the restructuring carried through in March 2005.


Barco Presentation & Simulation
Sales for the division decreased 7% compared to 2Q04, due to a decrease of 14% in Simulation versus sales in 2Q04, but the 2Q04 figure included a large project. Presentation sales grew 8% year-on-year.

The book-to-bill ratio was at a high 1.19, as the order-intake grew with 15%, mainly in the Simulation market, but growth was also noted in Presentation.

Gross profit margin improved to 41.7% versus 40.6% in 1Q05. It is however, still below the 48.2% of 2Q04 due to the changing product mix and the lower sales volume. EBITA margin improved sequentially from 3.6% in 1Q05 to 7%, but remained lower than EBITA margin of 2Q04 at 12.7%.


Barco Control Rooms
In 2Q04 sales grew by 18.1% year-on-year with good worldwide sales in all segments of the control room market. However, the Traffic & Surveillance market did particularly well.

Orders continued their strong growth with an increase of 9.5% compared to 2Q04. Successes in Europe, the Middle East and China keep increasing the order book. Book-to-bill was at 1.07.

The Control Rooms division shows a gradual recovery of gross profit margin from 39.7% in 1Q05 to 43.5%. In 2Q04 it was 50.5%. EBITA margin of 8.1% was a clear improvement from 4.1% in 1Q05 but is still below the margin of 14.4% in 2Q04.


BarcoVision
Sales at BarcoVision remained stable year-on-year.

The low book-to-bill ratio of 1.01 confirms the uncertainty in the textile market with regard to the impact of international trade disputes.

Gross profit margin increased to 47.4% from 45.7% in 2Q04, thanks to the introduction of a new product with a higher margin. EBITA margin was exceptionally high at 21.0%, thanks to the profitable sale of 2 buildings in the UK. Excluding this sale EBITA margin was 11.6% versus 10% in 2Q04.


Barco Manufacuring Services
Sales and orders decreased as more final assembly of other Barco divisions is moving to Asia where local subcontractors are used.

EBITA margin of 0.2% was stable versus 2Q04 despite lower sales. It was significantly better than the 1Q05 EBITA margin of minus 4.7% as a result of further cost control.



SHARE BUY-BACK PROGRAM
In 1H05 Barco spent euro 4.2 million on buying back shares. The company now owns 316,230 of its own shares. The buy-back program started in 2003.



CONFERENCE CALL
Barco will hold a conference call with investors and analysts on July 26, 2005, starting at 4.30 p.m. CET (10.30 a.m. EST), to discuss the results for the quarter. The call will be hosted by the Company’s CEO, Martin De Prycker, Antoon Van Petegem, CFO 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 8.00 p.m. CET (2.00 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 “6 months ending June 30, 2005”, please visit the Company’s website at www.barco.com

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LIMITED REVIEW REPORT OF THE STATUTORY AUDITOR ON THE INTERIM CONSOLIDATED FINANCIAL REPORT OF BARCO NV AS OF JUNE 30, 2005 AND FOR THE SIX-MONTH PERIOD THEN ENDED

(Free translation)

We performed a limited review of the interim consolidated financial report of Barco NV as of June 30, 2005 with a balance sheet total of EUR 714.837 thousand and a share of the group in the profit for the period of EUR 16.552 thousand. The interim consolidated financial report has been prepared in accordance with International Financial Reporting Standards.

The engagement has been performed in connection with the interim financial reporting of the company. We conducted our review in accordance with the relevant recommendation of the ‘Instituut der Bedrijfsrevisoren’ (Belgian Institute of Auditors). This review consisted primarily of the analysis, comparison and discussion of the financial information and consequently was less extensive than a full scope audit of the consolidated financial information.

Our review has not revealed any information that would lead to any material modifications to the interim consolidated financial report.


Kortrijk, July 25, 2005

Ernst & Young Bedrijfsrevisoren BCV (B160)
represented by

Marc Van Hoecke Ludo Swolfs
Partner Partner

For more information, please contact

JP Tanghe
Senior Advisor to the CEO
Barco nv

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