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News and Information Article
Excellent Q4 2006
Strong Recovery in the Banking Sector
Sustained Activity in the Mobile Segment
PARIS, January 24 /-FirstCall/ --
- Q4 Sales: EUR155.0M, up 15.4%[1] year-on-year
- Payment smart card volumes: +44.2% versus Q4 2005
Oberthur Card Systems reported revenue of EUR155.0 million for the
fourth quarter ended December 31, 2006 - up 15.4% compared to Q4 2005.
Revenue MEUR 2006 2005 Change Change
2006/2005 2006/2005
in EUR at in EUR at
MEUR MEUR constant current
exchange exchange
rates rates
First Quarter 121.9 118.1 -0.9% +3.1%
Second Quarter 122.9 121.1 +1.2% +1.4%
Third Quarter 124.2 124.5 +1.0% -0.3%
Fourth Quarter 155.0 137.1 +15.4% +13.1%
Full Year 524.0 500.8 +4.7% +4.6%
Fourth Quarter 2006
The company shipped over 89 million microprocessor cards in the last
three months of the year, compared to 58.2 million units one year earlier,
a 53.0% increase in volume terms. Revenue in this segment rose 21.9%
year-on-year to EUR104.9 million.
- Demand in mobile communications registered robust growth once more.
The company again performed strongly in this segment: SIM card volumes
rose, recording an increase of 56.1% to 55.2 million units, driven by
demand in South America, the United States and Asia.
Q4 2006 revenue amounted to EUR54.6 million, up 8.5% compared to Q4
2005 at constant exchange rates. Average Selling Price registered a 6.7%
decrease quarter-to-quarter; however prices grew sequentially in Europe and
in the United States as the result of improved product mix. Prices of lower
end SIM cards (16K) continued to decrease.
Product mix remained excellent in established markets, but emerging
countries pushed up the proportion of 16K cards. Globally, high-end
products (64K and above) made up 64% of volumes sold, against 53% a year
ago.
- In the payment market, microprocessor card deliveries for the fourth
quarter 2006 recovered strongly, rising 44.2% year-on-year to 23.0 million
units. Oberthur Card Systems revenue increased by 30.5% compared to last
year in this product line, to EUR30.8 million. Sequentially, volumes were
up 29.9% versus a 25.1% increase in revenue.
This first-class performance was primarily due to the recovery, as
announced, in the payment sector in Europe, especially in France, UK,
Netherlands, Italy, and Spain. In addition, the firms strengthening
positions in the fastest-growing regions was decisive, enabling it to seize
major growth opportunities. The company registered significant orders with
major banks in the Asian region during the quarter.
In the US, the company faced a temporary slow down in the contactless
segment.
The ASP erosion, -10% compared to the same period a year ago, reflects
the broadening of the Groups customer portfolio and geographic mix.
- Sales for the quarter in the Identity and Security segment totaled
EUR19.5 million, up 61.2% at constant exchange rates compared to Q4 2005.
Volumes were up 56.9% compared to last year, at 10.8 million units.
Activity was particularly sustained in Asia, as the result of shipments of
modules for the Thai e-passports, in Europe with significant deliveries of
health ID cards in Italy, and also in the US as Federal ID programs
accelerated. In addition, the company also benefited from positive market
trends in Pay-TV.
Sales of Other Cards - magnetic stripe cards, loyalty cards, scratch
cards and memory cards - amounted to EUR19.6 million, a 5.6% increase on a
year-on-year basis. Activity levels remain robust despite contrasting
situations: demand was slightly down in Europe due to EMV migration.
Conversely, sales volumes grew in the United States compared to the same
period a year ago.
At EUR30.5 million, revenue in Services & Solutions is roughly stable
year-on-year. Contrasting with a good performance in Q4 2005, sales in
North America were down 17% due to reduced activity in the gift card
segment. On the other hand, activity was sustained in Europe. The
improvement came from France, Italy and the Netherlands, where the
personalization of payment smart cards grew strongly.
2006: H2 registers strong recovery, after a difficult H1
Oberthur Card Systems set new records in 2006 in terms of revenue and
volumes. Full-year revenue grew by 4.7% to EUR524.0 million. Volumes of
microprocessor cards delivered hit a new record of 271.5 million units, up
39.4%. In 2006, competitive conditions in the industry were difficult,
resulting in strong price pressure. Top-line growth reached EUR338.9
million, up 4.5% in this segment.
After a difficult first semester, the company improved its performance
in the second half, especially in the payment sector, where European demand
had dipped temporarily in H1, coming in below expectations.
- In the payment market as a whole - microprocessor cards, magnetic
stripe cards and personalization services - exceeded EUR248.3 million.
Payment microprocessor card volumes topped 72 million units compared to 77
million units in 2005. This decrease was mainly due to two momentary and
localized events in the first part of the year.
In France, the migration to DDA[2] started in H2 2006 thus deliveries
to banks were low during the first semester; in the UK the company
performed strongly in H1 2005, resulting in a comparative decrease in
shipments during the first six months of the year.
Deliveries reverted to a more regular trend in H2 in Europe, and an
aggressive development drive in Asia started to pay off: volumes tripled.
At the end of 2006, the aggregate payment and services segment
accounted for 47% of Oberthur Card Systems revenue.
- In mobile communication, SIM card top line revenue amounted to
EUR181.4 million in 2006, up 11.2%, while volumes topped 168 million units,
a 70.6% increase. Due to the changing competitive environment in H1 and
low-end mix in booming emerging countries such as India, the average SIM
card sale price fell by 35% compared to 2005 at constant exchange rates.
The company posted a solid performance in terms of product mix, with
high-end SIM cards representing almost 72% of GSM sales compared to 65% a
year before -128K cards represented 18% of sales.
For 2006, the mobile communication segment as a whole - SIM, scratch
cards, services & packaging - represented 37% of Oberthur Card Systems
revenue.
- In the Identity market, Oberthur Card Systems confirmed and
reinforced its positions in this still emerging segment. Volumes were up
63.4% on a 38.6% revenue increase to EUR55.5 million. This growth is coming
from both Identity and Pay-TV. Business developed rapidly thanks to major
programs: National ID cards in Morocco, Health Care cards in Italy,
e-passports in Thailand, and large Governmental deployments with the US
administration. In parallel, Pay-TV showed a sustained increase, notably in
Europe and in Asia.
Outlook
The SIM card market environment will remain competitive and migration
to breakthrough technologies will be progressive. Meanwhile, the company
will continue its efforts in two directions:
- Cost-cutting: in 2007, to offset continuing price pressure, the
company will pursue its cost-cutting plan in order to return to a regular
level of profitability. It still has sufficient flexibility to make deeper
cuts during the year.
- A dedicated product offer: the product range is going to be
complemented with a SIM offer dedicated to emerging markets. This
broadening of the product portfolio will be facilitated by the acquisition
of IM Technologies, expected to be closed in the first half of 2007.
In the payment sector, continuing the trend already noticed in Q4 2006,
2007 is expected to be a year of recovery for Oberthur Card Systems thanks
to the vigor of two of its principal markets: France and the United
Kingdom. In many countries, where Oberthur Card Systems already has
strategic positions, EMV migration is expected to enter its ramp-up phase,
notably in Southern Europe but also in Asia. The company opened 12
personalization centers in 2006; these light footprints should start to pay
off in 2007.
On January 2, Philippe Geyres joined the company as CEO. He will pursue
Oberthur Card Systems ongoing geographic expansion and industrial
rationalization. The companys objectives remain to be a key player in all
regions capitalizing on its presence in all segments and its drive for
innovation. Philippe Geyres will further elaborate on his strategy for
achieving this goal, in the months to come.
As expected, the company forecasts an improvement in second-half
earnings compared to H1 2006.
Full-year results will be released on March 15, 2007.
The Slide Show will be available on the companys web site (investors
section) on Wednesday, 24, January before the conference call scheduled for
8.30 am Paris Time.
Exhibit
Breakdown of sales in MEUR by card type and geographic region
MEUR 4Q2006 4Q2005 Change
4Q2006 / 4Q2005
Constant Current
exchange exchange
rates rates
Microprocessor cards 104.9 86.8 +21.9% +20.9%
Payment 30.8 23.7 +30.5% +29.8%
Mobile Communications 54.6 50.9 +8.5% +7.4%
Identity & Security 19.5 12.2 +61.2% +60.1%
Other Cards 19.6 19.5 +5.6% +0.6%
Services & Solutions 30.5 30.8 +2.2% -1.0%
Total 155.0 137.1 +15.4% +13.1%
Geographic region 4Q2006 4Q2005 Change
4Q2006 / 4Q2005
Europe 76.3 66.4 +15.0%
MARS 31.9 27.0 +18.0%
North America 37.8 37.6 +0.6%
Asia / Pacific 9.0 6.1 +48.1%
Total 155.0 137.1 +13.1%
MEUR Full year Full year Change
2006 2005 2006 / 2005
Constant Current
exchange exchange
rates rates
Microprocessor cards 338.9 323.2 +4.5% +4.9%
Payment 102.0 121.3 -15.7% -15.9%
Mobile Communications 181.4 161.8 +11.2% +12.1%
Identity & Security 55.5 40.1 +38.6% +38.3%
Other Cards 78.1 75.5 +4.4% +3.5%
Services & Solutions 107.0 102.1 +5.2% +4.7%
Total 524.0 500.8 +4.7% +4.6%
Geographic region Full year Full year Change
2006 2005 2006 / 2005
Europe 251.1 274.5 -8.5%
MARS 105.6 88.7 +19.0%
North America 134.6 115.8 +16.1%
Asia / Pacific 32.7 21.8 +49.9%
Total 524.0 500.8 +4.6%
About Oberthur Card Systems
With sales of 524.0 million Euros in 2006, Oberthur Card Systems is one
of the worlds leading providers of card-based solutions, software and
applications including SIM and multi-application smart cards as well as
services ranging from consulting to personalization.
Innovative products, security expertise and high quality services
ensure Oberthur Card Systems strong positioning in its main target
markets:
- Payment & Services: 47% of 2006 revenues. World leader and number one
supplier of Visa and MasterCard payment cards
- Mobile Communications: 47% of 2006 revenues, with open and
interoperable solutions based on Java(TM) technology.
- Identity: strong positions in ID projects throughout the world
- Multimedia: leading position in the Pay-TV market with an end-to-end
expertise in the value chain: software development, manufacturing and
personalization
- Transit: focus in the high-end segment with a microprocessor-based
offer
Close to its customers, the company benefits from an industrial and
commercial presence across all five continents. Listed on the Euronext
Stock Exchange (ISIN: FR0000124133) since July 2000, Oberthur Card Systems
is a subsidiary of the Francois-Charles Oberthur Group.
For more information, visit http://www.oberthurcs.com
Oberthur Card Systems Image 7
Investors / Press Contact: Caroline Simon-Phelip
Tel : +33-1-53-70-74-65
Stephanie Cau Mail: caroline.simon@image7.fr
Tel: +33-1-47-85-56-57
Mail: s.cau@oberthurcs.com Tiphaine Hecketsweiler
Tel : +33-1-53-70-74-59
Mail: thecketsweiler@image7.fr
[1] variations on sales mentioned in this release are assessed at
constant exchange rates, except where indicated
[2] Dynamic Data Authentication, surest and most recent authentication
methods off line offered by the EMV technology, requiring a crypto
processor within the smart card
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