Diebold's Q2 profit falls 46%
25 July 2006 | 4750 views | 0
US ATM manufacturer Diebold is reporting a 46% drop in second quarter profits after earnings were again hit by restructuring charges.
Diebold says net income for the second quarter fell to $17.2 million, from $32 million a year ago. Diluted earnings per share were $0.26 compared to $0.45 in the second quarter of 2005.
The results include a restructuring charge of $0.10 per share from the termination of an IT outsourcing agreement with Deloitte Consulting and product development "rationalisation". Diebold said in May that it was terminating an IT outsourcing deal with Deloitte Consulting as part of an overhaul of its global technology operations. The vendor says excluding the impact of these items, diluted earnings per share would have been $0.36.
But revenue rose 17% to $726.4 million, exceeding analysts' estimates of $654.8 million. Financial self service revenue was up 9.4% in the quarter, led by an increase of 24.4% in EMEA.
Diebold has been struggling against falling financial services revenue in North America and Europe and has incurred restructuring charges to cut costs and improve its profitability.
The vendor has implemented a multi-year profit improvement plan that encompasses a $100 million reduction in cost structure by 2008. Thomas Swidarski, president and chief executive officer, Diebold, says: "While we are still early in this process, we remain on target to meet our multi-year profit improvement goals."
In April the vendor said it was closing its existing ATM production facility located in Cassis, France in order to cut costs and was establishing a new operation in Eastern Europe, most likely in Budapest, Hungary. In today's statement Diebold says the planned production facility in Hungary is "progressing well" and is on schedule to be operating by the fourth quarter 2006.