Weak sales in Europe and North America drove down Diebold Inc.'s second-quarter earnings.
The automated teller machine maker also reported that it is looking into complaints of corruption within its Russian operations.
Diebold said net income fell 2.3% from last year's second quarter, to $29.7 million. Revenue fell 3.7%, to $665.2 million.
"While we are encouraged by the results we are seeing in some pockets of the region, much work remains in [Europe] for Diebold to be positioned as strongly as it is in other regions of the world," Tom Swidarski, the company's president and chief executive, told analysts during a conference call July 29.
Diebold, of North Canton, Ohio, said it is conducting an internal review of compliance with international corruption standards after discovering some inconsistencies related to its Russian unit. Diebold discovered the problem while evaluating a potential acquisition in Russia.
The company is reviewing its Foreign Corrupt Practices Act compliance and will report the findings to the Department of Justice and the Securities and Exchange Commission.
Diebold said the probe could affect all of its operations in Eastern Europe.
Revenue in the Europe-Middle East-Africa segment fell 13.5%, to $76.3 million. Swidarski said opportunities in Italy, Spain and the Middle East could drive up revenue in the second half. Diebold recently landed a contract to provide 500 ATMs to a bank in the Europe-Middle East-Africa region. Swidarski would not name the bank.
"This is an account where we historically had no presence, and this win represents the progress we are making in improving our competitive position in key areas of" Europe, the Middle East and Africa, Swidarski said. Diebold expects the contract to generate revenue by yearend.
Diebold's biggest percentage-increase growth was in Latin America, which includes the fast-growing Brazilian market. Revenue rose 12.8% in Latin America, to $175.8 million. Helping the revenue increase in Brazil was an order of 30,000 voting machines for the country. Diebold expects growth to continue in the financial sector in Brazil as banks there continue to deploy envelope-free ATMs.
Revenue fell 11% in North America, to $322.6 million, as major banks' shift to envelope-free ATMs slowed, largely because of economic concerns. However, orders for envelope-free ATMs picked up at regional banks, a trend the company expects to continue through the rest of the year.
Revenue in the Asia-Pacific region rose 8%, to $90.4 million. Swidarski said that pace of revenue growth could continue through the year.
