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Diebold rakes in 11% increase in net income from Q2 '08

Diebold's Q2 results reveal net improvement, with a slight revenue loss.

August 3, 2009 by Tracy Kitten — Editor, AMC

Diebold Inc. reported slight decreases in revenue and a slight increase in net income from the second quarter of 2008 to Q2 2009 — a striking contrast from the earnings reported last month by Diebold's top ATM competitors, NCR Corp. and Wincor Nixdorf AG. Overall, the company says it is on track with annual expectations. (Read also, NCR reports revenue loss, 91% net decline for the year and Wincor Nixdorf reports declining sales as global economic clinch tightens.)

Diebold reported revenue of $700.5 million, down 9 percent from Q2 2008. Net income for the quarter was $31.7 million (46 cents per share), up 11 percent from the $28.5 million (41 cents per share) reported in Q2 '08. For the year, net income is down 19 percent, from $44 million (62 cents per share) in '08 to $35 million (48 cents per share) in '09. Revenue for the first six months also is down, 7 percent, from $1.5 billion to $1.4 billion.

Diebold president and chief executive Tom Swidarski says the company's cost-reduction efforts have paid off. Diebold's net debt came in at $238.4 million at the end of Q2, down $15.8 million from Dec. 31, 2008 and down $134.4 million from June 30, 2008:

I am pleased with the progress of our SmartBusiness 200 cost-reduction initiative, and we continue to make strides to lower our overall cost structure. We also continue to make progress in working capital management, as demonstrated by our significant improvement in net debt and free cash flow. In addition, our intense focus on services resulted in the eighth consecutive quarter of year-over-year improved service gross margin. While we performed very well in the second quarter, the economic condition of our core markets in the financial industry continues to create a challenging environment. As we stated in the first quarter, there are signs that the market has bottomed out and is beginning to stabilize. For the remainder of this year, however, we don't expect any significant rebound in demand, as spending remains tight with our financial customers.

Swidarski says Diebold will continue to evaluate and monitor its manufacturing footprint and existing lines of business.

During the fourth quarter of 2008, Diebold closed its EMEA-based enterprise security operations.

Diebold's financial self-service product and services orders were down 2 percent for Q2 '08 to Q2 '09, while product and services orders in the security business were down 20 percent year over year. But a 50-percent increase in financial self-service orders from Asia-Pacific helped to offset the 30-percent reduction in financial self-service orders from the Americas and a 40-percent reduction in those from Europe, the Middle East and Africa.

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