Oberthur Card Systems posts Q4 results

Fourth quarter sales amounted to €137.1 million, an increase of 1.1% compared to the outstanding 2004 Q4.

Fourth Quarter

During the last three months of the year, the company delivered more than 58 million microprocessor cards compared to 44 million in Q4 2004, a 32.2% increase on a year-to-year basis.

In the mobile communications market, Oberthur Card Systems' strategy over the past several semesters has clearly continued to pay off in 4Q/05. Boosted by a 58.3% growth in volumes, - 35.4 million shipped SIM cards during the quarter versus 22.3 million for the same period in 2004 – the increase in sales in the GSM sector reached 6.5% to represent €50.8 million over the quarter. The sharp increase in volume was spurred by new customers. The ASP decrease during the period is the result of strong price pressure and the successful penetration of new dynamic markets, promised to migrate to upper level SIM Cards in the near future.

In the payment market, particularly strong sales in the fourth quarter 2004, up 20% year-on-year, led to a comparative decrease in sales in Q4/05. With 16 million cards delivered, vs. 18.8 million the previous year, sales – €23.8 million – decreased by 27.8% on a year-on-year basis. The decrease in the payment sector is entirely attributable to the end of the ‘chip & pin’ program in the UK. The quarter was also characterized by strong demand of contactless cards in the US.

Sales in the Identity and Security segments reached €12.2 million, increasing 34.1% compared to Q4 2004. This growth comes mainly from Pay-TV cards and identification cards in Turkey. During the quarter, this segment also started to benefit from the global ramp up of national and military identity programs. Oberthur Card Systems’ strategy, over the past two years, is starting to pay off. In Q4 2005, this segment market contribution to the quarter revenue reached almost 9%.

Sales of Other Cards – magnetic stripe cards, loyalty cards, scratch cards and memory cards – reached €19.5 million, a +9% growth. This sustained revenue growth was driven by Southern Europe and US dynamism, in parallel with the purchase of a South African company, Africard, sales of which amounted to €1.4million during the period.

At €30.7 million, sales in Services & Solutions were up 11.5% on a year-on-year basis. Personalization services showed growth in all areas, particularly in the U.S.

2005: Outstanding performances

Revenues for the full year 2005 were up 11.3%, at €500.8 million. Activities were sustained in all business sectors and volumes of delivered microprocessor cards reached an historic level of 194.7 million units, a 31.3% increase.

In 2005, in the payment market, Oberthur Card Systems generated revenues of €121.3 million. Payment microprocessor card shipments reached 77 million units compared to 74 million units in 2004. The increase was essentially driven by the contactless cards deployment in the US. In 2005, the European market was atypical: in many countries, EMV migration hasn’t generated volumes yet while the UK program entered a renewal phase, after completing the high growth migration phase. The whole payment and services segment represents 53% of Oberthur Card Systems’ 2005 sales.

Wireless revenue was up 20.8% to €161.8 million, confirming the Group’s winning strategy in this market. SIM card volumes rose 51.2% to 98.5 million units, driven by strong growth in South America, in the US, in the Middle East and in Asia. The outstanding increase was fuelled by a sharp volume growth in high end shipments: 128K cards represented 8% of SIM volumes in 2005 vs. 4% in 2004 and 64K cards reached 48% in 2005 compared to 36% the year before.

As a result of Oberthur Card Systems’ strategic position in the security field, 2005 saw a sharp increase in revenues (+44.4%) in the Identity market.

Outlook

In 2005, Oberthur Card Systems continued to expand its geographical coverage and to reinforce its industrial and services facilities: UAE, South Korea, Senegal, India and South Africa are the latest countries in which Oberthur Card Systems has developed its business.

The deployment of state-of-the-art pre-sales and personalization tools will bring the best of technology in terms of flexibility and performance to all offices around the world, while enhancing the company’s profitability. These tools will allow Oberthur Card Systems to better serve its customers and to benefit from a competitive advantage in all sectors. This is especially relevant in the banking segment, which promises sustained growth in the coming years.

Full Year results will be released on March 8th, 2006.