In its financial results for the third quarter ended June 30, 2004, prepress specialist Creo reports revenue of $156.2M, an increase of 8.8 per cent from the third quarter of 2003. Net loss was $1.6M, a decrease of $4.3M from 2003. Consumables revenue reached $21.6M – 77.5 per cent up on last year and 2 per cent compared to the second quarter 2004.
“This quarter we accelerated the implementation of our digital media strategy,” said ceo Amos Michelson. “In just nine months, we have built a solid business that will be the basis for continued growth for many years. We continued this quarter to see strong demand for the full range of our complete systems, including CTP hardware, software, proofing, and consumables, despite the expected and temporary levelling of sales due to customers’ anticipation of the quadrennial drupa trade show. We remain committed to driving profitable growth and will continue to take all steps necessary to increase both earnings and revenue.”
Revenue by segment for the quarter was 37 per cent in the Americas; 36.5 per cent in Europe, Middle East and Africa (EMEA); 13.8 per cent in Asia-Pacific (including Japan); and 12.7 per cent in OEM and Other. Results were particularly strong in Asia-Pacific. For the year-to-date, all segments showed gains over the prior year.
Amos Michelson continued: “At drupa, customers crowded the booth and made digital plate commitments at an unprecedented level. While the anticipation of drupa did cause some customers to defer purchase decisions, we expect bookings from the show will drive increased revenue in the fourth quarter and beyond. The revenue growth from the digital media strategy is clearly apparent. However, we operate in a very competitive market and face cost pressures from the strength of the Canadian dollar and Euro. We have concluded that we must reduce expenses in order to ensure that profitability will grow with our increased revenues. We are conducting a thorough review of our cost structure and spending priorities leading into the new fiscal year.
“As part of this effort, we will be consolidating operations and moving the Creo Americas subsidiary headquarters from Boston to Vancouver. This move will reduce costs, streamline management and increase efficiency.”
Mark Dance, Creo’s chief financial officer and chief operating officer, added: “In the fourth quarter, we expect to incur $3M to $4M in restructuring, retention and accelerated depreciation costs as we consolidate the North American head office to Vancouver. We expect those changes will allow us to reduce expenses by approximately $2M per quarter by the middle of the 2005 fiscal year.”
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