Oberthur Card Systems today reported second quarter 2007 revenues of EUR144.2m, 17.4% above the record of Q2 2006 and following a 10% growth in the first quarter.
Sales for the semester amounted to EUR278.1m, a 13.7% increase year-on-year.
During this quarter, microprocessor card deliveries grew by 57% compared to Q2 2006 to 90 million units, sustained by a strong demand in the two main business segments, Mobile & Payment.
Year-to-date, deliveries were up 52% to 111.8 million units, highlighting the expected recovery in 2007.Mobile Product Line:
SIM market demand remained strong during the second quarter, with sales amounting to EUR53.8m, a 28.4% growth compared to Q2 2006. I'M Technologies is now fully integrated in Oberthur Card Systems' scope of consolidation as of April 1st, and posted sales of EUR3m in Q2 2007, contributing for about 7.2 points of growth in mobile.
With 58.4 million cards delivered, a 62.5% increase in volume on a year-on-year basis, the company registered its largest volume ever delivered to the mobile segment.
All regions contributed to this momentum.
In Europe Middle East Africa (EMEA), the second quarter was even higher than the record of Q4 2006 in terms of volumes and sales, as a result of sustained demand in Italy, Spain, and Hungary but also a good restart in Russia. Africa confirmed its status as one of the emerging and fast growing areas in the GSM sector.
In Asia, volumes were up 85% year-on-year and 26% sequentially. At constant perimeter, without I'M Technologies the Asia region would have posted a 19.7% growth in volume year-on-year. ASP raised 20% quarter-to-quarter thanks to a lower impact of the Indian market that represented 40% of the region's volume in Q2 compared to 80% in Q1 2007, with a higher mix of 32K cards versus 16K cards.
In the Americas, volumes were up 59% year-on-year and 51% sequentially. South America and Mexico are still posting excellent growth.
Overall, the mobile average selling price for the whole company was slightly up compared to the previous quarter due to more favorable product mix. However, by product family, ASP continued to decline sequentially.
Oberthur Card Systems has confirmed its strong position in the high-end segment: more than 71% of SIM revenues were high-end cards, with 17% of sales coming from 128K deliveries.
Scratch card activity is developing rapidly, as planned. This sub-segment recorded a good performance with EUR4.3m in sales a sequential growth of 11% growth. Volumes were up 57% year-on-year.
Overall, sales in Mobile Communications amounted to EUR59.2m, representing 41% of Oberthur Card Systems' Q2 2007 sales.Finance Product Line(1):
In the microprocessor payment card market, Oberthur Card Systems registered ongoing growth on a year-on-year basis. The company posted EUR34.9m in sales, a 54.9% increase year-on-year.
Volumes reached 26 million units, a 70% increase on Q2 2006; all regions posted a significant improvement. More precisely, France, Italy, the United Kingdom, the Netherlands and the United States (contactless card) outperformed during Q2.
The sequential stabilization in ASP has been confirmed in Q2. Year-on-year, price decline has been well controlled with a 9% decrease essentially due to product mix.
In the same period, conventional card business grew slightly in value sequentially, to EUR14.4m. New contracts in Asia are starting to pay off. Year-on-year, the 18.4% decrease was mainly due to EMV and contactless migrations.
The personalization services also increased compared to the same period a year ago, in line with the bounce-back of activity in the microprocessor payment card segment. Sales amounted to EUR22.9m, up 6.1% compared to the same period a year ago. Lower activity in the United States was largely offset by strong demand in the United Kingdom, the Netherlands and Italy.
The whole payment segment, which represented 50% of Oberthur Card Systems Q2 2007 sales, amounted to EUR72.2 m, a 16.8% increase compared to Q2 2006.Identity Product Line(2):
In Q2 2007, activity in this product line was temporarily down with sales amounting to EUR12.4m, an 11% decrease year-on-year. Revenue in the smart card segment for the quarter amounted to EUR10.2m, down 17.3% compared to the previous year. Volumes for the Identity and Security segment reached 5.6 million units, an 11.4% decrease essentially due to a low cycle in the Thai e-passport and the Moroccan ID Card deliveries. In addition, expected growth with the Sesam Vitale program has been delayed. The decline in ASP was limited, with a fall of 6.7% year-on-year. Business development activity continued to be strong: second generation EAC passports, personalization of TWIC cards in the US, French private health care insurance, continued deployment of US government employee cards, French notary public electronic signature cards...
On June 18th, Oberthur Card Systems has announced a plan to reorganize its industrial sites. In line with the efforts already made over a period of several years, Oberthur Card Systems is organizing itself, ensuring there are major centers in each region, in order to achieve economies of scale while maintaining geographical proximity to its customers.
In the United States, card personalization centers will be reorganized in two centers instead of three. The activity of Naperville (Illinois) will be transferred to Los Angeles (California) and Chantilly (Virginia).
In France, in order to maintain a sustainable production, Oberthur Card Systems has presented a reorganization project:
- Production of high added value SIM cards currently in Caen, would be kept in France and regrouped with bank cards in Vitre,
- Production of SIM cards with low added value would take place in existing sites outside Europe.
In parallel, Oberthur Card Systems is investing in growth markets. Shenzhen (China) is confirmed as a main manufacturing hub. In addition, two significant investments are under way in Brazil & India, countries with high entry duties, strong growth in mobile and a large development potential in payment.
In sales, Oberthur Card Systems achieved a good performance in the first semester of 2007 with 13.7% growth compared to H1 2006. This achievement is mainly due to the expected bounce-back of activity in payment, which is Oberthur Card Systems' core business. I'M Technologies is now completely integrated in terms of teams, products and sales. Altogether, this will have a positive effect on gross margin and current EBIT for this half year, compared to the same period last year.
However, the industrial reorganization described above, which will improve the company's competitiveness and the level of service provided to its customers worldwide, will engender provisions in H1 2007 financial statements.
The Slide Show will be available on the company's web site (investors' section) on Wednesday, 25Th July around 7.00 am. The conference call is scheduled for 8.30 am Paris time.
H1 2007 results will be published on October 2nd, 2007.
(1) Payment, loyalty & transit
(2) Identity, Health care, Pay-TV...
Read the statement here:Download the document now 4.1 kb (PDF File)