The growth in cutsheet was achieved through our expanded distribution power and the competitive office product portfolio sourced via our strategic alliance with Konica Minolta. In the productive cutsheet segment DDS again increased its installed base for both color and Océ VarioPrint 6xxx equipment. In the third quarter DDS introduced the Océ VarioPrint 1105 and the Océ VarioPrint 4000, which will fuel further growth in cutsheet printing.
Worldwide the market for continuous feed systems declined in 2008, reflecting ongoing developments in the financial sector. As a result, DDS placements in the third quarter declined compared to the same period of the previous year. DDS has a highly professional and appreciated sales and service force organization and a competitive product portfolio for continuous feed systems. DDS maintained its market share and increased its installed base of continuous feed systems. DDS is confident of maintaining its strong position thanks to our continuous feed order book as well as the new successful full color portfolio. This portfolio consists of the Océ VarioStream 9240, the Océ ColorStream 10000 and the Océ JetStream series for which DDS booked several substantial orders in the third quarter.
Recurring revenues amounted to Euro 250.9 million. In the third quarter organic recurring revenues, excluding fax, decreased by 1.5%. DDS grew its volume of invoiced prints both for black-and-white and color prints. As a result the recurring revenues related to cutsheet equipment increased in the quarter.
Recurring revenues related to continuous feed systems decreased due to declining print levels, mainly following developments in the financial services sector.
Normalized operating income amounted to Euro 1.6 million (2007: – Euro 4.0 million). DDS achieved this improvement by growing its business in the office segment and productive cutsheet printing.
Océ Business Services (OBS)
Revenues in OBS amounted to Euro 101.1 million. Organic growth was again strong with 5.9%. OBS shows consistent growth as the trend to outsource document management activities continues.
Hertz Corp. has selected Océ Business Services to provide global document process outsourcing services. Océ will provide a range of services that span the document lifecycle (creation through disposal) to help Hertz achieve its efficiency enhancement goals, for example by changing the manual document management process into an electronic flow. This assignment is a five year multi-million dollar international contract encompassing North America and Europe, and the OBS operations center in the Philippines.
Normalized operating income amounted to Euro 0.8 million (2007: Euro 3.2 million). The growth of OBS requires continued customer start-up investments. Furthermore the slowdown of litigation services activities in the US negatively impacted profitability. OBS has taken actions to restore profitability including a change in management structure and focus on business growth at existing customers.
Wide Format Printing Systems (WFPS)
Revenues in WFPS amounted to Euro 203.3 million. On an organic basis the revenue decrease was 4.5%. The share of color increased to 34% of revenues significantly higher than the 28% in the third quarter of last year.
Non-recurring revenues amounted to Euro 74.7 million. The organic decrease was 3.9%. Excluding the acquisition of Intersoft the decline was 7.1% compared to the very strong third quarter of 2007 (in which non-recurring revenues rose 20.8%). This decline was caused by lower equipment sales in Technical Document Systems following the slowdown in the construction sector. WFPS continued to ramp up the production of the new, much demanded, Océ ColorWave 600. As announced earlier the Océ ColorWave 600 contribution to 2008 revenues will be limited.
In the display graphics market WFPS grew its equipment sales as a result of its enhanced product portfolio, e.g. the new Océ Arizona Roll Media option and the initial sales of the new Océ Arizona 200 GT. The Océ Arizona 250 GT continued to sell well.
Recurring revenues amounted to Euro 128.6 million. The organic decrease was 4.8%. Excluding the acquisition of Intersoft and the divestment of Arkwright the decline was 3.0%, caused mainly by lower print volumes in the construction market. WFPS grew its revenues in the display graphics segment. On balance revenues relating to the installed base were in line with the third quarter of 2007 and the decline in recurring revenues was mainly attributable to lower media (especially wide format paper) sales in Imaging Supplies.
Normalized operating income was Euro 14.4 million (2007: Euro 22.0 million). The decline was mainly caused by lower revenues and start-up costs of the Océ ColorWave 600.
For 2008 Océ will pay an interim dividend of
Euro 0.15 per ordinary share outstanding (2007: Euro 0.15). The
ex-dividend date is October 2, 2008. The interim dividend will be
payable in cash from October 21, 2008. The proposal with respect to the
final dividend will be announced in January together with the
provisional results for the full financial year 2008.