Gemalto sales down 7%
According to Gemalto the major source of these poor results come from a slower than expected performance in Telecom: mobile communication and public telephony. The volume for SIM cards increased by just 9% compared to Q1/2006 reaching 215 million units, most of the it coming from the Aspac and EMEA regions. This relatively low volume growth is attributed by Olivier Piou to the new policy to establish a “price discipline”, to keep SIM ASPs (Average Selling Price) and avoid a too quick ASP fall. SIM ASPs dropped by 34% in H1/2006 and 32% in Q3/2006. Of course, being firm on prices impacts volume growth.
In the Secure Transactions segment, Gemalto shipped 53 million cards during Q1/2007, a 16% increase vs. Q1/2006. Most of the cards are EMV cards (mainly in Europe and Latin America), followed by the Pay TV segment. Gemalto also reported noticeable shipments of contactless payment cards to North Asia, the UK and the USA.
After several quarters of steady growth, ID & Security sales are down 9% to EUR 47 million, although this is a combination of 22% growth, coming from the ePassport segment and a shrinkage of patent licensing and lower end transportation cards revenues.
Gemalto also announced a regional split of its sales:
Cost synergies from the merger are materializing progressively in line with the Company's expectations, but they will not be sufficient to offset the adverse effect on the operating margins of the strong price decline of last year. In H2/2007, Gemalto expects the positive seasonal pattern to bring a contribution to the margin and the first digital security solutions deployments to take place. Gemalto will continue to make the necessary adjustments to its cost base, with more job cuts, especially by closing plants in China and in the UK. Olivier Piou reaffirmed his objective of a 10% operating margin in 2009.
Gemalto annual general shareholders' meeting will be held in Amsterdam on May 22, 2007.