Gemplus International S.A. reported results for the second quarter ended June 30, 2001. Revenue for the second quarter was 252 million Euros, down 8% from the same quarter a year ago. Operating loss, before restructuring, was 12 million Euros, compared with an operating profit of 34 million Euros for the same quarter a year ago. Operating loss, after restructuring, was 41 million Euros. Net loss for the second quarter, including restructuring, was 40 million Euros, or 0.06 Euro per fully diluted share. Net loss for the quarter, excluding restructuring, was 21 million Euros, or 0.03 Euro per diluted share.
“Our second quarter operating results reflect the progress we have made in strategically repositioning the company,” said Antonio Perez, president and CEO. “We have adjusted and realigned our resources to exploit the opportunities in the Telecommunications, Financial Services and E-Business Security Applications markets.”
The company announced that it had successfully implemented its planned restructuring program. “This is a major step forward to increase our financial competitiveness,” added Perez. “This restructuring will reduce headcount by 567 people by the end of 2001 and save the company 40 million Euros in annual expenses, with about 17 million of the savings occurring in the second half of the year.” The company noted that it would be taking a 28 million Euro restructuring charge. No social plan was implemented in France.
Perez also noted that the sale of its SkiData operation complements its restructuring programs and would enhance the company’s strategic focus. Gemplus announced an agreement to sell Skidata to Kudelski S.A. in June and expects to finalize the transaction shortly.
“I am also very pleased with the continued rapid growth and margin improvement that we are seeing in our Financial Services Business,” added Perez. Earlier, the company announced that this business unit had recently been awarded a major contract with the Target Corporation. “These recent developments demonstrate that our strategy is on track. The contract with Target Corporation, the fourth largest general merchandise retailer in the U.S., is particularly interesting as it marks a significant milestone in the adoption of smart card based solutions in the U.S. retail sector.”
The company indicated that its reported results included a favorable 10 million Euro royalty expense adjustment. “While we achieved our goal of restructuring to improve our cost base and competitiveness, we had to deal with the challenging Telecommunications market and resulting softness in our GSM business,” commented Perez. “The impact of the business mix shift from Telecommunications and GSM to Financial Services has been felt in gross margin. However, the underlying rapid growth and significant margin improvement in our Financial Services business are very exciting.”
“We expect to maintain our leadership market share in the SIM card market and are encouraged by signs that the excess SIM inventory at operators are coming down,” added Perez. “We should see a more reasonable balance between inventory and end-user demand by the end of the year.” The company now believes that the market for GSM SIM cards is around 300 million units which based upon historical correlation implies a total number of mobile handsets shipped by manufacturers this year to be 375-380 million units.
Looking forward, Gemplus indicated that it expects third quarter revenue to grow 7% sequentially with operating losses of about 13-18 million Euros. For the year 2001, the company expects revenue will be flat to down compared to the year 2000 with operating profit, before restructuring, at about 5 million Euros.
Cash and cash equivalents were 430 million Euros at June 30, 2001. The company’s financial results were derived from its consolidated financial statements, which have been prepared in accordance with International Accounting Standards (IAS).
GEMPLUS: the world’s number one provider of solutions empowered by Smart Cards (Gartner Dataquest 2001).
Gemplus helps its clients offer an exceptional range of portable, personalized solutions that bring security and convenience to people’s lives. These include mobile Internet access, inter-operable banking facilities, e-commerce and a wealth of other applications.
Gemplus is the only completely dedicated, truly global player in the Smart Card industry, with the largest R&D team, unrivalled experience, and an outstanding track record of technological innovation.
Gemplus trades its shares on Euronext Paris S.A. First Market and on the Nasdaq Stock Market(R) as GEMP in the form of ADSs. Its revenue in 2000 was 1.205 billion Euros. It employs 7800 people in 37 countries throughout the world.
Gemplus: Your Passport to the Digital Age — www.gemplus.comDetails