Tous Actualités
Suivre
Abonner Gemplus

Gemplus

Gemplus Reports Second Quarter 2004 Results

Luxembourg (ots/PRNewswire)

  • Second quarter highlights:
  • Group revenue, up 22.1% year-on-year, sustained across all business segments and geographies.
  • Operating income further improved to 8.5 million euros (up 22.4 million euros year-on-year), before restructuring and goodwill(1).
  • Net income at 1.1 million euros (up 83.4 million euros year-on-year).
  • Cash remains strong at 383.1 million euros.
Gemplus International S.A. (Euronext: LU0121706294 - GEM and
NASDAQ: GEMP), the world's leading provider of smart card solutions,
today reported results for the second quarter ended June 30, 2004.
    In millions of euros     Q2    Q1    Quarter-on-quarter Q2    Year-on-
                                                                  year
                             2004  2004  change             2003  change
    Main items of the Income Statement
    Net sales                210.5 197.3 +6.7%              172.4 +22.1%
    Adjusted for currency                +4.3%                    +25.0%
    fluctuations, discontinued
    operations and acquisitions
    Gross profit             68.0  61.2  +11.1%             47.8  +42.2%
    Gross margin as a % of   32.3% 31.0% +1.3 ppt           27.7% +4.6 ppts
    sales
    Operating income (loss)  8.5   4.8   +78.4%             -13.9 NM
    before restructuring and
    goodwill
    Net income (loss)        1.1   0.3   +225.2%            -82.4 NM
    Per share data (in euros)
    Earnings (loss) per      0.00  0.00  NM                 -0.14 NM
    share (fully diluted)
    Main items of the Balance Sheet
    Cash and cash            383.1 384.6 -0.4%              406.2 -5.7%
    equivalents
Note: The consolidated financial statements of the Company have
been prepared in accordance with International Financial Reporting
Standards (IFRS).
Commenting on the performance for the second quarter 2004, Alex
Mandl, President and Chief Executive Officer, said: "Reporting
healthy growth and further margin improvement confirms Gemplus'
continuous progress for the fifth consecutive quarter. We are very
satisfied with our growth rate which, we believe, is above that of
the market. These results bring further evidence of Gemplus' ability
to capture market opportunities, and support the Company's leadership
position in the industry."
Second quarter 2004 financial review
Income statement
Highlights:
  • Revenue up 22.1% year-on-year (+25.0% currency adjusted(2)) and up 6.7% quarter-on-quarter (+4.3% currency adjusted).
  • Highest gross margin in three years: 32.3%, up 1.3 percentage point sequentially, led by strong product mix improvement in all regions.
  • Operating income up 78.4% quarter-on-quarter, to 8.5 million euros, before restructuring and goodwill.
In the second quarter, sales enjoyed favorable development across
all business segments, growing 25.0% year-on-year, currency adjusted.
On a geographical basis, the Americas revenue rose 42.2%, Asia was up
27.7% and EMEA up 16.6%.
Gross margin increased by 1.3 percentage point compared with the
first quarter 2004, to 32.3%, mainly driven by strong product mix
improvement in all regions which fully offset selling price declines.
Moreover, this was helped by productivity improvements, and software
and services performance.
Operating expenses, excluding restructuring and goodwill, rose
5.4% quarter-on-quarter to 59.5 million euros, mainly related to
sales and marketing. Operating expenses represented 28.3% of sales
during the quarter under review, compared to 28.6% for the previous
quarter and 35.8% a year ago.
Operating income was up 3.7 million euros quarter-on-quarter and
up 22.4 million euros year-on-year, before restructuring and
goodwill.
Costs relating to the planned restructuring of operations in
Germany, which was announced in May, are expected to be booked during
the third quarter 2004.
Net income for the second quarter increased by 0.8 million euros
quarter-on-quarter, mainly driven by revenue growth and improved
gross margin.
Balance sheet and cash flow statement
Highlights:
  • Free cash flow of 5.7 million euros, before restructuring.
  • Strong cash position stable at 383.1 million euros.
The free cash flow before restructuring(3) was driven by improved
profitability partly offset by increased working capital requirements
(up 7.8 million euros).
The Group's cash position remains strong and stable compared to
March 31, 2004, despite restructuring outflows of 6.2 million euros.
Gemplus has reached an agreement with the French tax authority on
its tax assessment in France. As previously disclosed, three French
subsidiaries of the Group received a tax assessment in 2002 relating
primarily to the fiscal years 1998 through 2000. Under the terms of
this agreement, Gemplus will pay 34 million euros, most likely before
the end of 2004, which is in line with the Company's provision.
Therefore, there is no material impact on the Income Statement for
the second quarter 2004. Approximately 23 million euros of this
amount are expected to be temporary, which the Group should recover
before the end of 2007 through the use of tax-loss carry-backs. As a
result, 34 million euros of long-term liability are reclassified as
short-term liability.
Segment analysis
Telecom
Second quarter 2004 highlights:
  • Wireless revenue up 42.0% year-on-year (+45.5% currency adjusted).
  • Wireless shipments up 40.4% year-on-year, to 59.6 million units.
  • Substantial improvement in wireless product mix in all regions.
  • Wireless average selling price up 4.1% year-on-year, currency adjusted.
    In millions of euros     Q2    Q1    Quarter-on-quarter Q2    Year-on-
                                                                  year
                             2004  2004  change             2003  change
    Net sales                154.0 146.6 +5.1%              124.2 +24.0%
    Adjusted for currency                +2.6%                    +27.4%
    fluctuations, discontinued
    operations & acquisitions
    Gross profit             55.1  49.7  +10.9%             38.6  +42.8%
    Gross margin as a % of   35.8% 33.9% +1.9 ppt           31.1% +4.7 ppts
    sales
Revenue reflects the strong performance of wireless:
Wireless products & services revenue(4) was up 42.0% year-on-year
(+45.5% currency adjusted), to 135.0 million euros.
Second quarter wireless shipments grew 40.4% year-on-year to 59.6
million units, reconfirming strong market demand. Shipments were
stable quarter-on-quarter, due to a very strong first quarter.
Gemplus maintained its strong investment in R&D, bringing greater
innovation to its products. This is reflected in the improved product
mix seen in all regions. Overall, high-end cards shipments (including
64kb and above, as well as 3G) rose to 33.4% of the total in the
second quarter compared to 21.5% in the first quarter.
Price pressure continues to be a factor in the market, as a result
of a very challenging competitive environment. However, sales mix
improvement more than compensated for selling price declines.
Consequently, wireless average selling price (ASP) was up 4.8%
sequentially and 4.1% year-on-year, both currency adjusted.
Financial Services
Second quarter 2004 highlights:
  • Revenue up 15.1% year-on-year (+16.7% currency adjusted), driven by EMV(5) migration.
  • EMV roll out gaining momentum beyond the UK.
    In millions of euros     Q2    Q1    Quarter-on-quarter Q2    Year-on-
                                                                  year
                             2004  2004  change             2003  change
    Net sales                44.7  40.4  +10.7%             38.8  +15.1%
    Adjusted for currency                +8.6%                    +16.7%
    fluctuations, discontinued
    operations & acquisitions
    Gross profit             8.8   9.1   -3.8%              6.8   +29.3%
    Gross margin as a % of   19.7% 22.7% -3.0 ppts          17.5% +2.2 ppts
    sales
Revenue growth was primarily driven by EMV and, to a lesser
extent, by Pay-TV cards. Payment microprocessor card revenue rose 37%
year-on-year and 15% quarter-on-quarter.
EMV shipments continued to improve with strong growth in
Scandinavia, France and Mexico.
Microprocessor card revenue growth was partly offset by lower
sales in magnetic stripe cards, due to cannibalization by EMV cards.
Revenue from Pay-TV and contactless cards in the transportation
sector was strong, helped by improved execution.
Identity and Security
Second quarter 2004 highlights:
  • Revenue up 26.5% year-on-year (+26.9% currency adjusted).
  • Successful implementation of strategy focused on subsystems.
    In millions of euros     Q2    Q1    Quarter-on-quarter Q2    Year-on-
                                                                  year
                             2004  2004  change             2003  change
    Net sales                11.8  10.3  +14.3%             9.4   +26.5%
    Adjusted for currency                +12.1%                   +26.9%
    fluctuations, discontinued
    operations & acquisitions
    Gross profit             4.1   2.4   +71.9%             2.4   +68.7%
    Gross margin as a % of   34.9% 23.2% +11.7 ppts         26.2% +8.7 ppts
    sales
Identity and Security revenue was driven by the conjunction of
several projects in both the Government ID and Corporate Security
markets. The material improvement in gross margin, driven by a
significant shift in the sales mix, endorses Gemplus' strategy
focused on selling subsystems based on software components,
value-added services and high-end cards.
Year-on-year revenue growth was also driven by the roll-out of
Government ID solutions in the United Arab Emirates, which offsets
the completion of the successful delivery of ID solutions to the
Royal Oman Police.
Outlook
For the remainder of the year, the Company's financial performance
should continue to benefit from favorable market trends,
notwithstanding continuous selling price pressure.
Considering first half results and given the current outlook for
exchange rates, the Company revises upward its operating income
guidance in the range of 30 million euros for 2004, before
restructuring and goodwill.
Change in presentation of financial statements
Gemplus financial statements are prepared in accordance with
International Financial Reporting Standards since the Company's
initial public offering in 2000. As required by the US Securities and
Exchange Commission, Gemplus also provides a reconciliation of net
income and shareholders' equity between IFRS and US GAAP, due to its
Nasdaq listing.
From now on, Gemplus has decided to report goodwill amortization
and impairment under operating expenses. This is in line with the
Company's effort to choose, when feasible, IFRS options allowing for
a reporting as close as possible to US GAAP. Thus, what was
previously reported as operating income/loss is now shown as
operating income/loss before goodwill amortization and impairment.
Business Highlights
Telecom
The trend among leading European operators to increasingly rely on
the SIM for operator and end-user centric services (such as phonebook
and service provisioning) remains strong.
In Europe, Gemplus has delivered high-end 128Kb USIM cards for
deployment with `3', the UK's first video mobile network. Coupled
with Gemplus' OTA platform, GemConnect OTA, this shows both
companies' commitment to set the agenda for video mobile services.
Gemplus' GemConnect OTA has been successfully implemented to ensure
`3' customers can access `3' services whenever they are in video
mobile coverage.
In the United States, Gemplus continues to deliver its products
and services to the national operators that purchase SIM cards. It
also provides SIM-based solutions and content messaging services to
US operators, with demonstrable increases in ARPU. Gemplus operated
these on behalf of their clients and also provided the content to
make the Information on Demand services a success.
In Asia, Gemplus 128Kb SIM cards allowed Globe Telecom in the
Philippines to offer prepaid customers the higher value services of
phonebook space for 750 numbers and 100 SMS, international roaming
capability and access to `myGlobe' and `myOrganizer' services and
content.
Financial Services
The EMV roll-out gained momentum beyond the UK, with Gemplus
starting to ship volume quantities of cards in Scandinavia and in
France. Gemplus also recently signed contracts for card deliveries in
Portugal, Russia, the Czech Republic, Chile and Lithuania. In these
countries and elsewhere, Gemplus leverages its global footprint to
establish new business relationships and partnerships, using its
experience throughout the world to design the best migration strategy
for its customers.
Frost & Sullivan recently awarded Gemplus its 2004 Competitive
Strategy Leadership Award, in recognition of Gemplus' substantial
market share gains in the financial and loyalty smart card market
over the last four years. Frost & Sullivan commented: "With its
strong focus on technology, EMV migration and global orientation,
Gemplus has substantially increased its presence in the smart card
market for banking and loyalty, and is set to make further inroads in
the market."
Identity and Security
Gemplus' Identity and Security solutions continues to add value at
significant enterprise deployments such as Pfizer and Boeing.
Gemplus' technologies are supporting the emerging market of secure
Identification Badge credentials in a logical and physical access
environment.
Earnings calendar
Third quarter 2004 results are scheduled to be reported on October
27, 2004, before the opening of Euronext Paris.
Conference Call:
The company has scheduled a conference call for Wednesday, 28 July
2004 at 2:00 pm CET. Callers may participate in the live conference
call by dialing:
+44(0)207-784-1017 or +33(0)-1-70-70-81-98, access code 990648.
The live conference call will also be available on the IR section
of www.gemplus.com.
Replays of the conference call will be available from 6:00pm CET
to 1 August 2004 midnight by dialing:
+44-(0)-207-984-7578 or +33(0)1-70-70-82-10, access Code: 990648.
About Gemplus
Gemplus International S.A. (Euronext: LU0121706294 - GEM and
NASDAQ: GEMP) is the world's leading player in the smart card
industry in both revenue and total shipments (source:
Gartner-Dataquest (2003), Frost & Sullivan, Datamonitor.) It has the
largest R&D team, unrivalled experience, and an outstanding track
record of technological innovation.
Gemplus helps its clients offer an exceptional range of portable,
personalized solutions that bring security and convenience to
people's lives. These include Mobile Telecommunications, Public
Telephony, Banking, Retail, Transport, Identity, WLAN, Pay-TV,
e-government, access control, and a wealth of other applications.
Gemplus' revenue in 2003 was 749 million euros.
www.gemplus.com
(c)2004 Gemplus. All rights reserved. Gemplus, the Gemplus logo,
are trademarks and service marks of Gemplus S.A. and are registered
in certain countries. All other trademarks and service marks, whether
registered or not in specific countries, are the property of their
respective owners.
Some of the statements contained in this release constitute
forward-looking statements. These statements relate to future events
or our future financial performance and involve known and unknown
risks, uncertainties, and other factors that may cause our or our
industry's actual results, levels of activity, performance or
achievements to be materially different from any future results,
levels of activities, performance, or achievements expressed or
implied by such forward-looking statements. Actual events or results
may differ materially. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or
achievements. Factors that could cause actual results to differ
materially from those estimated by the forward-looking statements
contained in this release include, but are not limited to: trends in
wireless communication and mobile commerce markets; our ability to
develop new technology, and the effects of competing technologies
developed and expected intense competition generally in our main
markets; profitability of our expansion strategy; challenges to or
loss of our intellectual property rights; our ability to establish
and maintain strategic relationships in our major businesses; our
ability to develop and take advantage of new software and services;
and the effect of future acquisitions and investments on our share
price. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of such
forward-looking statements. The forward-looking statements contained
in this release speak only as of this release. We are under no duty
to update any of the forward-looking statements after this date to
conform such statements to actual results or to reflect the
occurrence of anticipated results.
Gemplus International SA
Press Release - Financial statements
For the quarterly period ended June 30, 2004
1) Accounting principles:
The consolidated financial statements of the Company have been
prepared in accordance with International Financial Reporting
Standards (IFRS).
2) Business segment reporting
Second Quarter 2004 Compared with second Quarter 2003
Net sales                     Three months ended
                                  June 30,
                                  2004       2003      % change
                                  (Millions of euros)
    Telecommunications            154.0      124.2     24%
    Financial Services            44.7       38.8      15%
    Identity and Security         11.8       9.4       26%
    Total                         210.5      172.4     22%
Gross profit                   Three months ended
                                   June 30,
                                   2004       2003      % change
                                   (Millions of euros)
    Telecommunications             55.1       38.6      43%
    Financial Services             8.8        6.8       29%
    Identity and Security          4.1        2.4       71%
    Total                          68.0       47.8      42%
Six Months 2004 compared with Six Months 2003
Net sales                     Six months ended
                                  June 30,
                                  2004       2003      % change
                                  (Millions of euros)
    Telecommunications            300.6      233.9     29%
    Financial Services            85.1       75.1      13%
    Identity and Security         22.1       17.6      26%
    Total                         407.8      326.6     25%
Gross profit                    Six months ended
                                    June 30,
                                    2004       2003      % change
                                    (Millions of euros)
    Telecommunications              104.8      69.5      51%
    Financial Services              18.0       12.1      49%
    Identity and Security           6.5        3.9       67%
    Total                           129.3      85.5      51%
3) Geographic reporting
Second Quarter 2004 Compared with second Quarter 2003
Net sales                      Three months ended
                                   June 30,
                                   2004        2003      % change
                                   (Millions of euros)
    Europe, Middle East and Africa 109.6       93.1      18%
    Asia                           50.1        40.9      22%
    Americas                       50.8        38.4      32%
    Total                          210.5       172.4     22%
Six Months 2004 Compared with Six Months 2003
Net sales                      Six months ended
                                   June 30,
                                   2004        2003      % change
                                   (Millions of euros)
    Europe, Middle East and Africa 206.0       179.3     15%
    Asia                           103.2       79.5      30%
    Americas                       98.6        67.8      45%
    Total                          407.8       326.6     25%
(1) Operating income/loss before goodwill amortization and
impairment is referred to as operating income/loss before goodwill
(see also Change in presentation of financial statements)
(2) After adjusting for currency fluctuations, discontinued
operations and acquisitions.
(3) Free cash flow before restructuring is defined as net cash
flow from operating activities, excluding restructuring expenses,
less the purchase of property, plant and equipment and other
investments related to the operating cycle (excluding acquisitions
and financial investments).
(4) Wireless products & services revenue comprises wireless
microprocessor cards and related applications (embedded software and
Over The Air platforms) and services (system integration and operated
services).
(5) EMV is a jointly defined set of specifications adopted by
Europay, MasterCard and Visa at the end of 1997 for migration of bank
cards to smart card technology.

Contact:

For more information: Press Gemplus Martin Crocker Tel:
+33(0)-4-42-36-30-46 Mob : +33(0)-6-85-07-66-41 Email:
celine.berthier@gemplus.com; Investor Relations Gemplus Celine
Berthier Tel: +41(0)22-544-5065 Email: martin.crocker@gemplus.com;
Edelman Stephen Benzikie Tel: +44(0)207-344-1325 Mob:
+44(0)774-003-8929 Email: stephen.benzikie@edelman.com; Fineo Tel:
+33(0)-1-56-33-32-31 Email: investors@gemplus.com