News

Wincor Nixdorf cuts earnings forecast, cites sagging markets

The company expects flat earnings year over year, but still expects EBITA to grow on sale of Singapore facility.

July 29, 2014

In response to unfavorable developments in key emerging markets, Wincor Nixdorf AG has revised its forecast for fiscal 2013/2014 as a whole, the company announced in a news release. Wincor now expects net sales comparable to the previous year — without the 4 percent rise originally projected.

However, the forecast for operating profit remains unchanged, with EBITA expected to increase by 17 percent to €155 million ($208 million). This projected figure now includes the proceeds from the forthcoming sale of the company’s former production facility in Singapore, which is expected to close in September.

Following the discontinuation of production activities by Wincor Nixdorf at the Singapore site, the company had been faced with the decision whether to sell the facility or repurpose it.

The original annual forecast for Wincor reflected high expectations for growth in emerging markets. However, business performance in this region has been affected by a sustained deceleration of economic momentum. The depreciation of local currencies has also been a factor in some markets.

Wincor CEO and President Eckard Heidloff said he views this challenging climate as being of a temporary nature:

Our strategy with a focus on growth in the emerging countries is and remains the right choice. After all, as the local population continues to expand and the level of prosperity grows, so too will demand for banking and retail services. We want to and, indeed, have to be in on the action.

As anticipated at the beginning of the current fiscal year, business in the industrialized markets of Europe is progressing at a subdued rate. There is still no prospect of a sustained improvement in the investment climate for retail banks and retailers in this region, which remains Wincor Nixdorf’s largest market.

"In order to cushion the effects of slower growth, we will continue to restructure our company," said Heidloff, citing the potential of supporting customers in their migration to digital sales channels.

"In combination with innovative hardware, software is increasingly establishing itself as a core element underpinning this change," he said.

The company's recent sales trends support this expectation. While net sales attributable to the hardware business fell 8 percent, year on year, to €822 million (€890 million) in the first nine months of the fiscal year, net sales in the software and services business were up 3 percent at €981 million (€951 million).