Gemalto revenue +14% in H1/2011
Olivier Piou, CEO, commented: “Our four main segments generated 16% revenue growth and 35% profit expansion. These results evidence Gemalto’s strong progress along its strategic plan, which combines organic growth with bolt-on acquisitions. Secure Transactions stood out, with 21% revenue growth and double-digit profit margin. Security also recorded double-digit revenue growth and increased profit margin. We continued to invest in our new mobile offerings and as a result, we expect Mobile Communication to return to year-on-year profit expansion for the second semester. The sustainable and wider adoption of the EMV standard and dual interface contactless cards further adds to our confidence in delivering on the EUR 300 million profit from operations target we have set for ourselves in 2013.”
Revenue for the first semester was up by +14% at historical rates, to EUR 928.5 million. Expansion was supported by strong growth in the Secure Transactions, Security and Machine-to-Machine segments partially offset by lower activity in the Mobile Communication segment.
First semester 2011 profit from operations came in at EUR 93.0 million, i.e. 10.0% of revenue. The increase was driven by the accelerated global migration to EMV and contactless payment in Secure Transactions, double digit growth in Security, notable progress made in delivering synergies from acquired companies.
Gemalto says it is anticipating a return to year-on-year profit expansion in Mobile Communication for H2/2011, on the back of the first large deployments of Near-Field Communication (NFC) mobile contactless services and LTE fourth generation networks announced for the latter part of the year. Olivier Piou reaffirmed Gemalto’s target of EUR 300 million in profit from operations in 2013.
Gemalto anticipates a strong growth of the Total Available Market over the next few years:
Mobile communication posted revenue of EUR 444.1 million, lower by 3% year on year at constant exchange rates. Product revenue was lower by 4% year-on-year at constant exchange rates in line with the more marked seasonal sales pattern anticipated for 2011. Volume growth was once again strong in rapidly developing countries.
Gemalto says that Software and Services grew to EUR 72 million in revenue this semester as developments in new service offerings were realized. The organic developments made notably in mobile contactless (Near Field Communication - NFC) and mobile financial services (MFS) led to significant “pay-per-use” contracts wins that will produce effects gradually as consumer adoption ramps up.
Profit from operations came in at EUR 30.5 million for the segment, lower by EUR 9.8 million. Gemalto says it expects the segment to return to expansion of year-on-year profits in the second half of 2011, thanks to software and services, and deployments of NFC and MFS services.
Gemalto insists on its reinforced collaboration with the Orange Group in mobile contactless payment deployment in Europe, with the commercial deployment of Barclays-Orange services in the UK and the PTK Centertel commercial pilot in Poland, in which Gemalto provides NFC software and user interface applications embedded on an NFC SIM, and Trusted Service Management (TSM) services.
Machine to Machine
Gemalto now reports Machine to Machine activities separately from Mobile Communication, essentially thanks to the acquisition of Cinterion activities in July 2010 (cf. Smart Insights Weekly #10-27). Gemalto says the Machine-to-Machine segment posted revenue of EUR 84.2 million driven by the continuing growth of this activity in the industrial sector. The segment operating expenses were EUR 23.1 million, and supplemental marketing efforts were deployed. R&D expenses in new products and services were sustained
Gemalto says that Secure Transactions posted a record performance this semester, growing by an impressive 21% at constant exchange rates to EUR 251.1 million. In line with the trend that began in the second half of 2010, growth this semester was driven by countries migrating to EMV in the Americas, as well as European financial institutions upgrading to contactless dual interface payment cards.
The segment’s profit from operations for the period settled at EUR 26.4 million. This corresponds to a double-digit profit margin of 10.5%, up almost 8 percentage points on 2010.Gemalto expects the Secure Transactions segment to outperform the objective set out as part of the company’s long-range development plan in 2009, and record double digit profit margin from operations for the full year 2011.
Security generated EUR 146.5 million in revenue. The segment’s growth accelerated in the second quarter on the back of new e-documents and e-services deployments in the Government Programs activity whose revenue for the semester increased +14% at constant exchange rate.
Patent revenue settled at EUR 2.6 million, lower by EUR 13.5 million on last year’s figure, confirming the anticipated impact on the segment’s activity of the public patent litigation Gemalto initiated in the USA to protect its intellectual property. Gemalto says the temporary decrease in the segment’s level of activity was associated to the difficulty in signing new intellectual property licenses for the Company’s portfolio of 4500 patents on a fair reasonable and non- discriminatory basis pending the outcome of this litigation.
Gemalto also provides details about its revenue by region: