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NCR, Diebold fare better than expected, despite financial drops
The world's leading ATM manufacturers reported stronger-than-expected financial results, but both companies say they will continue to cut expenses and improve efficiences.
Much ado was made about NCR Corp.'s under-funded pensions by industry analysts. But NCR beat financial expectations, despite a $56 million net loss, negative 35 cents per share, from continuing operations for the fourth quarter of 2009. Income from operations came in at $39 million for Q4, and included a $41 million pension expense.
The loss — a significant drop from the $55 million net gain, 34 cents per share, reported a year earlier — was fueled by a $151 million ($97 million after-tax) net charge related to the Fox River environmental matter, a $24 million ($15 million after-tax ) impairment charge related to an equity investment and related assets, and $6 million in expenses ($4 million after-tax) related to the relocation of NCR headquarters.
That compares to $7 million of pension expenses and $25 million of costs related to organizational realignment and legal matters during Q4 2008.
Revenue for the quarter was down 5 percent from last year, coming in at $1.35 billion.As of Dec.31, 2009, NCR had a debt balance of $15 million.
Diebold Inc. came out in the black, reporting Q4 income from continuing operations of $7.9 million, 12 cents per share, and revenue of $724.9 million. But net income and revenue were down, 55 percent and 8 percent, respectively, from Q4 2008.
"The economic challenges that 2009 imposed on our business affected our results but did not slow the initiatives we're putting in place to build NCR into an exciting growth company," said Bill Nuti, chairman and CEO of NCR. "This year we successfully launched our entertainment business, opened new manufacturing plants and greatly strengthened our operating infrastructure.Despite tough end-market conditions, we also finished 2009 on a solid note, exceeding expectations largely due to improvements in our core industries. Taken together, we believe these accomplishments and our ongoing commitment to investing in innovation put us firmly on the path to produce better results in 2010 and make continued progress toward our long term goals."
NCR during Q4 exceeded its goal to roll out the first 2,500 DVD-rental kiosks by year's end. In December, the company expanded its network of DVD-rental kiosks through the acquisition of DVDPlay, an operator of approximately 1,300 kiosks in the United States and Canada. The company now says it plans to convert the acquired kiosks to its BLOCKBUSTER Express brand and has plans to install its BLOCKBUSTER Express kiosks in more than 200 Duane Reade locations in New York. NCR also during Q4 expanded its BLOCKBUSTER Express brand to Tedeschi Food Shops, a 188-location convenience store chain across New England.
NCR also announced a digital download pilot with MOD Systems, which allows users to download movie titles to memory cards.
Like Wincor Nixdorf AG, which reported a 6 percent dip in net sales and a 13 percent dip in profit for the first quarter of fiscal year 2009/2010, NCR and Diebold say the global economic downturn continues to take a toll on ATM and related self-service sales.
"We delivered solid operational results during the fourth quarter, despite a number of challenges the financial industry continues to face," said Thomas W. Swidarski, Diebold's president and CEO. "In addition to growth in orders and full-year cash flow, we generated improved service margins during the quarter — representing our 10th consecutive quarter of year-over-year improved service gross margin."
Swidarski said that while sales improved across most geographies, Diebold's business related to bank branch construction in North America has taken a hit.
"To improve our ability to invest in key growth initiatives, we are realigning our organization and resources to better support our opportunities in the emerging growth markets," he said. "Unfortunately, these changes will result in the elimination of approximately 350 full-time jobs from our North America operations and corporate functions. These reductions will be largely completed by mid-February."
NCR's reported overall revenue for the Americas was down 7 percent. In the Europe, the Middle East and Africa, revenue was down 12 percent, while revenue in Asia-Pacific was up 12 percent. But the quarter brought with it some highlights. In the financial space, NCR announced plans to equip ING Belgium with at least 1,200 cash-recycling ATMs — the most extensive deployment of cash-recycling ATMs in Europe, according to NCR. NCR also made its two-sided thermal printing technology standard on all NCR SelfServ 20- and 30-series ATMs in North America. In November, NCR opened its new manufacturing plant in Brazil, the world's 3rd largest ATM market.
At Diebold, product and services orders for financial self-service and security were up more than 20 percent from 2008, and global financial self-service orders increased more than 40 percent year over year. The company also noted a 40 percent increase in financial self-service orders from Q3 to Q4 — positioning the company for a positive second half of the year, Diebold says.
Orders in Asia-Pacific were up more than 50 percent. In the Americas, financial self-service orders also increased more than 50 percent — orders in Brazil and Latin America offset the double digit decline in North American sales. In Europe, the Middle East and Africa, financial self-service orders were up more than 20 percent, while security orders dropped year over year in the low double digit range. However, security orders were up for the second consecutive quarter.
Diebold's lottery systems sales in Brazil, which analysts speculated would offset losses in other regions, remains strong, despite an 8 percent dip in total lottery systems revenue in the country when compared with Q4 2008.
DepositsManufacturersNorth AmericaPublic CompaniesBank / Credit UnionDiebold NixdorfWincor Nixdorf International
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