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Revenue slumps for ATM manufacturer Diebold

Thomas Swidarski, president and CEO of Diebold Inc., said community and regional banks are ordering intelligent deposit ATMs.

July 28, 2010

Diebold Inc. this morning reported a lower second-quarter net income on a drop in sales primarily due to three U.S. national banks completing their rollouts of intelligent deposit ATMs. Diebold also reported disappointing sales and orders in the Europe/Middle East/Africa and Asia Pacific regions.

The North Canton, Ohio-based ATM manufacturer recorded a net income of $30.4 million, down 4.2 percent compared with $31.71 million for the same three-month period last year.

Income from continuing operations before taxes for the three-month period ending June 30 was $44.4 million, down 4.1 percent compared with $46.32 million in 2009’s second quarter.

The manufacturer reported second-quarter revenue of $665.18 million, down 3.7 percent compared with $690.89 million for the same three-month period last year. Diebold’s revenues came in below Wall Street analysts’ expectations of $715.5 million. The company, however, maintained its guidance.

Revenue for Diebold North America plummeted 11 percent to $322.63 million compared with $362.45 million in last year’s second quarter. In Europe/Middle East/Africa, revenue declined 14 percent to $76.32 million compared with $88.82 million in 2009’s third quarter.

There was better news in Asia Pacific and Latin America. In Latin America, including Brazil, Diebold recorded revenues of $175.80 million, up 13 percent compared with $155.9 million for same three-month period in 2009. In Asia Pacific, the company recorded sales of $90.41 million, up 8 percent compared with $83.68 million. 

Orders in Asia Pacific, however, fell 11 percent in the second quarter compared with last year. In Europe/Middle East/Africa, there was zero percent growth in orders compared with last year, and in North America, there also was zero percent growth in orders in 2010’s second quarter compared with last year’s second quarter.

Latin America, including Brazil, however, recorded a 29 percent increase in orders in 2010’s second quarter compared with 2009.

In North America, Thomas Swidarski, Diebold president and CEO, blamed the decline in revenue on Bank of America Corp. and JPMorgan Chase & Co., the two-largest bank-owned ATM networks, completing their deployment of intelligent deposit, or envelope-free, ATMs. Charlotte, N.C.-based Bank of America completed its rollout in December, and Chase finished its deployment this spring. San Francisco-based Wells Fargo & Co. is the third national bank installing intelligent deposit ATMs, and it expects to complete the rollout later this year. Only a small portion of Wells Fargo’s ATM business goes to Diebold and NCR Corp.

Swidarski told analysts during a conference call that regional and community banks, historically a tough market, are ordering intelligent deposit ATMs.

“The orders in the first and second quarters were the highest in five quarters,” said Swidarski, who added the orders were  coming off a low base. “We’re cautiously optimistic about the regional bank space.” But under questioning from an analyst, Swidarski admitted revenues from regional banks would not completely offset lost revenues from national banks.

Gil Luria, analyst with Wedbush Securities in Los Angeles, said Swidarski’s comments about the community and regional bank markets for intelligent deposit ATMs were very encouraging.

“Regional banks have big shoes to fill,” Luria said. “There is more inclination to buy intelligent deposit ATMs.”

Second-quarter revenues from financial self-service products were $203.74 million, down 23 percent compared with $265.53 million in 2009’s second quarter.

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Diebold Nixdorf

As a global technology leader and innovative services provider, Diebold Nixdorf delivers the solutions that enable financial institutions to improve efficiencies, protect assets and better serve consumers.

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