US ATM manufacturer Diebold is to cut 300 staff in Western Europe and North America and lower its full-year earnings guidance following a disappointing second quarter.
The 300 job cuts include 110 positions lost with the closure of a production plant in Virginia, which was announced earlier this month.
Diebold says regional banks in the US have been slow to upgrade and replace old products, leading to lower-than-expected North American revenue. This has led to a proportionately higher mix of revenue from the company's international operations and election systems businesses, which carry lower margins. A negative foreign currency exchange impact due to the strengthening of the dollar, particularly against the euro, also hurt results.
The company now expects second quarter earnings to be between 47 cents and 50 cents per share, or 54 cents to 57 cents per share after adjusting for restructuring charges and the startup of a European Opteva manufacturing facility. The vendor previously forecast quarterly earnings of 60 cents to 66 cents per share.
Full-year 2005 operating earnings are now expected to be $2.60 to $2.70 per share. Diebold previously expected full year earnings to be between $2.80 to $2.93 per share.
Walden O'Dell, Diebold chairman and CEO, says: ""We are disappointed with our financial performance during the quarter and with our revised outlook for the year... We are confident that by taking these aggressive cost actions now, we will be able to leverage our leadership position in the marketplace and ensure long-term, profitable growth."
Diebold says it has also discovered an accounting error that meant its North America sales commission accrual account was "under accrued" by about $13 million at the end of 2004. The vendor says a thorough review is currently underway and it has not included this amount in its earnings estimates.