Agfa-Gevaert NV's Q1 2025 Results: Navigating Declines in Traditional Markets with Growth Engine Resilience

Agfa-Gevaert NV (AGF) has emerged from Q1 2025 as a textbook case of strategic repositioning, leveraging its Healthcare IT, Digital Print, and Green Hydrogen divisions to offset declines in legacy film businesses. With margin improvements, disciplined capital allocation, and a clear path to cost savings, the company is primed to deliver outsized returns as it transitions into a leader in high-margin, sustainable industrial tech. For investors seeking exposure to this shift, now is the moment to act.

A Pivot to High-Growth Markets
The heart of Agfa-Gevaert’s turnaround lies in its Healthcare IT division, which delivered a staggering 288% surge in Adjusted EBITDA to €5.0 million in Q1, fueled by a 63% rise in rolling order intake. The division’s recurring revenue now accounts for 61% of total revenue, up from 57% in 2024, as cloud-based enterprise imaging solutions—like its award-winning XERO Viewer—dominate demand. This shift to software and subscription models is a masterstroke, insulating the business from volatility in hardware sales.

Meanwhile, the Digital Print & Chemicals division grew its Adjusted EBITDA by 128.8%, despite headwinds in equipment sales. A 16% jump in ink sales—driven by partnerships with EFI and BHS Corrugated—highlights the division’s focus on recurring ink revenue over one-time hardware sales. New product launches, such as the Ciervo H2050 and Jeti Tauro H3300 XUHS, further position Agfa to capitalize on the $40 billion industrial inkjet packaging market, which is growing at a 7% CAGR.

The Green Hydrogen Solutions subset faces near-term challenges, with sales down 18% in Western markets due to regulatory delays. However, the €30–40 million ZIRFON membrane plant—set to open in October—will supercharge production of high-performance electrolyzer membranes, unlocking demand in Asia, the Middle East, and Africa. This is a long-term bet on decarbonization, with green hydrogen expected to account for 24% of global energy by 2050 (IEA).

The Write-Down of Legacy Businesses
Agfa-Gevaert isn’t just investing in the future; it’s ruthlessly pruning its past. The Radiology Solutions division, once a cash cow, now hemorrhages cash due to the collapse of medical film markets. Revenue fell 15.6% year-on-year, and the division posted a €4.5 million EBITDA loss. But management is acting decisively: shutting down its U.S. film finishing plant to centralize operations in Belgium will save costs by H2 2025, while the sale of its Offset Solutions division to Aurelius Group (pending final price adjustments) removes drag from its balance sheet.

Capital Allocation: A Recipe for Value Creation
Agfa’s Q1 free cash flow dipped to -€27 million, but this is a calculated trade-off for future growth. The ZIRFON plant and inventory buildup are temporary drags; once operational, the plant will generate €50 million+ in annual revenue by 2027. Meanwhile, the company’s leverage ratio of 1.4x (vs. a 3.0x covenant limit) leaves ample room to borrow for further investments.

The data shows a clear divergence: Healthcare IT and Digital Print margins are soaring, while legacy divisions shrink. This is the hallmark of a successful turnaround.

Why Buy Now?
Agfa-Gevaert trades at a P/E ratio of 15.2x, far below its peers in industrial tech (e.g., Brother Industries at 20.5x or Ricoh at 18.9x). Yet its growth engines—cloud healthcare, industrial printing, and green hydrogen—are all in sectors poised for exponential growth. With cost savings kicking in by H2 2025 and the ZIRFON plant’s ramp-up, the company is set to deliver 20%+ EBITDA growth in 2026.

Investors who wait risk missing the inflection point. Agfa-Gevaert is no longer a relic of the analog age—it’s a high-tech disruptor in three of the most promising industries of the next decade. The time to act is now.

The chart tells the story: Agfa’s stock has lagged peers despite superior fundamentals. That gap is about to close.

Final Take
Agfa-Gevaert’s Q1 results are not just a snapshot of resilience—they’re proof of a strategic masterclass in navigating industry decline while building for the future. With its software-driven Healthcare IT, high-margin printing solutions, and green hydrogen moat, the company is positioned to outperform as the world shifts toward sustainability and digitization. This is a buy for the next five years—and beyond.