NORTH CANTON, Ohio - Diebold Inc. announced Thursday that it is cutting its profit expectations for the second quarter and rest of the year because of a drop in North American growth.
According to a news release, the company is cutting 300 jobs in North America and Western Europe. The cut includes the 110 jobs lost during the closing of the Danville, Va., manufacturing facility earlier this month. (Read also, Diebold to close ATM plant as part of realignment.)
Lower-than-expected ATM upgrades among regional banks played a role in the adjustment, as did higher revenue from the company's international operations and election systems businesses, which both carry lower margins. The strengthening of the dollar, particularly against Euro - which moved from approximately $1.30 to $1.20 during 2Q - also negatively impacted growth, where realigning the company's global product platform is concerned.
Diebold now expects 2Q earnings of between 47 cents and 50 cents per share, which includes restructuring charges and European Opteva manufacturing start-up costs. Excluding those items, earnings per share for the quarter are expected to be between 54 cents and 57 cents. Full-year 2005 operating earnings per share are expected to be $2.60 to $2.70, excluding manufacturing start-up and restructuring costs.
Diebold previously predicted quarterly earnings of 60 cents to 66 cents per share, including a restructuring charge of 1 cent to 2 cents per share. According to the Thomson Financial poll, analysts are looking for adjusted earnings of 64 cents per share for the April-June period.
"We are disappointed with our financial performance during the quarter and with our revised outlook for the year," said Walden W. O'Dell, Diebold chairman and chief executive officer. "Our global markets remain healthy as we once again experienced strong growth in orders and backlog during the quarter. However, our North America revenue outlook is lower than previously expected, resulting in a lower profit outlook. In addition, we continue to face challenges on the cost side as we transition to a global product platform. We are moving quickly and decisively to improve our performance by accelerating our cost-reduction initiatives."
