Struggling US ATM manufacturer Diebold says its first quarter profits more than halved after restructuring charges and production costs ate into earnings.
Diebold is reporting net income of $12.7 million, or 18 cents per share, for the first quarter of 2006 compared to $27.9 million, or 38 cents per share, a year ago. Excluding restructuring charges Diebold says earnings would have totaled 22 cents per share.
However revenue from continuing operations rose 16.5% to $623.7 million, led by US security and international financial self-service revenue.
To cut costs Dieobld says it plans to close its existing ATM production facility located in Cassis, France, and will establlish a new operation in Eastern Europe, most likely in Budapest, Hungary. The vendor plans to have this new facility operating by the fourth quarter 2006.
Commenting on the move, Thomas Swidarski, president and chief executive officer, says: "Realigning the company's manufacturing operations in Europe is necessary given the tangible growth we're seeing in Central and Eastern Europe as well as the prevailing market and competitive conditions in the financial self-service industry worldwide.
"In addition, this plan allows us to gain greater efficiencies in our supply chain and shorten customer lead times by being closer to our base of suppliers in Central and Eastern Europe."
The vendor will take a charge of 38 cents to 43 cents per share as a result of the closure of the Cassis facility. This is in addition to the restructuring charges of 12 cents per share for 2006 previously announced.
Dieobld has been struggling against falling financial services revenue in North America and Europe. The vendor says financial self-service orders in the quarter were in the low double-digit range. Solid order growth in EMEA and Asia Pacific offset order declines in the high single-digit range in North America.