President and chief executive Marc Olivi said: "2005 is a transition year. Starting in 2006 we expect the first beneficial effects of industrial ink-jet, the new growth platform for Graphic Systems, to become apparent."

Sales for the quarter in Graphics Systems are expected to be 300m (440m).

The firm expects strong second half sales and cost reductions of 27.2m to improve profitability for the year, but not to totally offset the shortfall of the first half of the year.

The firm is set to buy back 3% of its outstanding shares following shareholder approval for buying back up to 10%.

It also announced that plans to make its two business units Graphic Systems and Healthcare operationally independent have been put forward by a year and will take effect from the 1 January 2006.

Agfa shares fell 2.8% to 15.15.

Story by Barney Cox