Esko Records Another Quarter of Profitable Growth

For the first nine months of 2006, Esko sees its consolidated packaging business growing by more than 14% over the same period in 2005.

17/11/06 Esko, the world leader in packaging pre-production solutions, confirms its solid trend of continued business growth during the third quarter of 2006.

Consolidated net revenues increased by 11% compared to the third quarter of last year. Eliminating sales from discontinued products to other markets, packaging revenues increased by 13% year-over-year. New system sales (excluding services) grew by 29% compared to the same quarter in 2005. The EBITDA margin for the quarter was above 11%. Net working capital and cash flow continue to develop favorably.

For the first nine months of 2006, Esko sees its consolidated packaging business growing by more than 14% over the same period in 2005. New system sales (excluding services) during the period increased by 27% year-over-year. The EBITDA margin for the full period exceeds 9% of revenues, a more than four times improvement over the same period in the previous year.

Solid performance in all business areas

As in previous quarters, all regions and product lines contributed to the business growth. During the first nine months of 2006, Esko’s packaging business grew year-over-year by over 20% in Europe and by close to 15% in the North American and Asian markets.

From a product perspective, Esko’s flexo platesetter product line is the strongest performer, with worldwide sales increasing over 50% year-over-year. Growth for Scope software and Kongsberg tables exceeds 15%. Esko’s overall service business expands as well: the revenue growth in installations, maintenance contracts and other services for packaging customers well exceeds the decline in service activities related to discontinued CtF and offset CtP products in other markets.

“The continuation of our revenue growth in the third quarter indicates that Esko is capable of bringing the right integrated solutions to packaging designers and manufacturers worldwide, to help them take optimal advantage of new business opportunities in the market”, notes Carsten Knudsen, President and CEO. “It is important that we continue the dialog with our customers and with other supply chain players, to ensure that our solutions support the efficiency improvements, cost reductions, collaboration initiatives and technology changes constantly re-shaping the packaging industry”.

“For some two years now, Esko has been focusing its resources towards the packaging industry. We now see the results from the many improvement initiatives we initiated to streamline our organization, increase the efficiency of our internal processes, shorten decision paths and implementation schedules, and most importantly bring our customers closer into our day-to-day operations”, adds Knudsen. “A solid financial basis enables us to keep the company thriving, for example by funding new product development (by over 8% of revenues), extending our customer services resources, and launch into new markets and areas of activities”.

At the recent LabelExpo Americas show, Esko received the Label Industries' 2006 New Innovation award. The judges lauded Esko's innovative solutions that addressed JDF, remote proofing, 3D virtual imaging, the exceptional quality dots on the plate, fast make-ready - and a key commitment to a digital future for labels.

New distribution agreements target growth areas

As announced at LabelExpo Americas, Hewlett-Packard has become an Esko value added reseller with two digital front-end solutions for HP Indigo’s ws4000/4050/4500 presses, to optimize end-to-end digital printing solutions for label, flexible packaging and shrink sleeve converters. The dedicated Esko configurations dramatically decrease print preparation times and color matching capabilities, enhancing the overall workflow and productivity of HP Indigo industrial printing solutions.

Heidelberg Asia and Esko-Graphics Asia Pacific have concluded a reseller agreement enabling Heidelberg Asia to distribute Esko’s Scope packaging software modules DeskPack, Plato and ArtiosCAD as well as the popular Kongsberg XE10 folding carton cutting table. Heidelberg will target its folding carton converter customers in China, India, Korea and Malaysia with these Esko products. Heidelberg will provide first line support to its customers, backed by Esko’s Asia Pacific support organization for second line support.

“We are honored and proud to cooperate with these two eminent industry leaders”, adds Knudsen. “Both distribution agreements address areas within the packaging industry where business is expanding rapidly. More customers can now benefit from the combination of best-in-class products, backed by the knowledge and support of the respective partners, and thus create new value, better growth opportunities and stronger business returns”.

New products and services extend an already unique portfolio     

At LabelExpo Americas, Esko released DeskPack 3-dX, a new plug-in for Adobe Illustrator that supports virtual three-dimensional views and navigation for packaging design. At GraphExpo, three more DeskPack family plug-ins were unveiled: imageX, to translate embedded images into separate, externally linked images; seamlessX, a step and repeat tool for gravure or flexo cylinder workflows to produce continuous output of repeating patterns; and screenX, to add multiple ruling, angle and screening support within a single separation to Illustrator.

DeskPack is extremely popular with designers, tradeshops and converters, because it adds packaging functionality to Adobe Illustrator and Adobe Photoshop, which are used to create more than 90% of all packaging designs.

During the third quarter, Esko also introduced PerfectHighlights screening, bringing superior highlight quality, smoother vignettes, noticeable color gamut extension, and improved consistency between press runs for label and flexible packaging applications.

ArtiosCAD 7.10, the upcoming October release of Esko’s market leading structural design software, will incorporate technology from SolidWorks, the leading supplier of 3D CAD technology, creating a seamless workflow between product and packaging design environments.

Esko's new range of value-added consulting services provides proactive solutions addressing the challenges in today's packaging industry, focusing on the ‘I3’ goals: Improvement of current processes, Innovation by adopting today’s best practices and technologies, and Integration of applications that drive operational, planning and design processes.

Esko’s consulting services address five key domains: 'Quick Wins’, to design and implement an ROI improvement roadmap; Color Excellence, to improve color management standards and capabilities; Operational Excellence, geared at improving workflow efficiency and effectiveness; Collaborative Excellence, integrating partners in the packaging supply chain; and Integration Excellence, integrating application architectures based on the JDF framework.