Gemalto grows 1% in H1/2009 amidst economic crisis
Gemalto’s revenue and operating income figures for H1/2009 mark an improvement on the company’s H1/2008 performance. The semester was marked by resilience in Mobile Communication and Secure Transactions in an adverse economic environment, and by Security posting strong revenue growth and turning to operational profit for the first time, ahead of plan.
Gemalto’s net cash position was EUR 322 million at the end of June 2009, same as at the end of June 2008.
Second quarter sales reached EUR 433 million, a historical record for the company: Q2/2009 sales increased sequentially by 18% over Q1/2009, in line with the usual industry seasonality.
The company considers its has strong fundamentals and prospects. Gemalto now positions its mission as “providing trust and convenience to the wireless and digital world that is emerging, and look ahead with the goal of revenue growth and earnings expansion.” The company anticipates market seasonality in 2009 to be in line with historical patterns. Olivier Piou, Gemalto CEO, said “Gemalto delivers a record first semester; and Security reaches the milestone of profitable operations, ahead of our plan. We continue to benefit from our broad footprint and our unique business portfolio, which are essential elements of our ongoing objective of revenue growth and earnings expansion.” He also reaffirmed his 2009 objective of above 10% adjusted operating margin remains unchanged.
Financial analysts consider these results as a proof the merger between Gemplus and Axalto, initiated in 2006 is now completed. Gemalto H1/2009 results demonstrate the ability of the group to resist the ongoing crisis. Gemalto cash position allows the group to consider acquisitions, or to serve dividends to its shareholders. Analysts also recognize the maturity of the Secure Transactions and Security market segments, which are now profitable for Gemalto.
Gemalto also provides figures for each market segment:
For the first time in mobile communication history, revenue fell 6% to 416 million Euros, due to a weaker contribution from Asia according to the company. Gemalto says it continues to develop its long-term prospects in the mobile broadband ecosystem. For example, Gemalto and Verizon together in May announced the selection of Gemalto’s over-the-air (OTA) platforms and its UICC cards to support Verizon’s deployment of 4G LTE mobile Broadband services, emphasizing Gemalto’s capability to enable secure and reliable multimedia data connection, global roaming and remotely manage applications.
Sequentially, i.e. comparing Q2/2009 to Q1/2009, SIM card average selling price (ASP) is essentially stable. For H1/2009 and compared to H1/2008, the average SIM card selling price was lower by 14% at constant exchange rates.
Secure Transactions revenue for the second quarter of 2009 was EUR 119 million as further deployment of contactless payment cards, mainly in the EMEA region, offset the effects of inventory optimization measures of many customers.
During the semester, Gemalto announced that its personalization service was chosen to support the NFC pilot in Singapore by Citibank, M1 mobile and Visa. Market traction for more advanced DDA products and contactless payment cards continued to be strong.
Gemalto Security segment includes Government programs and Identity and Access Management (IAM). The segment turned profitable this semester ahead of plan on the back of faster developments in Government Programs.
Gemalto reports Strong deliveries of e-ID documents in the Americas and the Middle East, as well as a surge in deliveries for e-Passports during Q2/2009. Gemalto added references to its list of government contracts during this semester, with electronic national ID cards, as well as programs such as e-healthcare card in Gabon and the e-driver license in Australia.
Patent licensing revenue for the semester amounted to EUR 12.8 million, approximately double that of the previous year, with in particular the start of licensing of a new family of patents. This amount of patent licensing revenue represents a large majority of the patent licensing activity anticipated for the full year.
Public Telephony revenue continued to decline in line with its market trend as mobile telephony expands worldwide, and POS terminals recovered from a supplier quality problem that limited deliveries in the first half of 2008.