Diebold Inc.’s weak showing in the European market contributed to the ATM manufacturer’s 2.3% decrease in net income for the second quarter ended June 30, to $29.7 million from $30.4 million during the same time period last year.
Revenues totaled $665.2 million, down 3.7% from $690.9 million.
The North Canton, Ohio-based ATM maker expressed a desire to better position itself in Europe during the second half of the year.
“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, Diebold president and CEO, told analysts during a conference call July 29.
Diebold revealed during the call that 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 U.S. Department of Justice and the Securities and Exchange Commission.
Diebold expects the probe will affect operations in Eastern Europe.
Overall revenue during the quarter in the Europe/Middle East/Africa sector was $76.3 million, down 13.5% from $88.2 million a year earlier.
Diebold expects significantly higher revenue in the second half of this year as Italy, Spain and the Middle East region present increasing business opportunities, Swidarski said. Diebold recently won a contract to provide a financial institution with 500 ATMs, he revealed. Swidarski did not disclose 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 area of [Europe/Middle East/Africa],” Swidarski said. Diebold expects to earn revenue from that order by yearend, he added.
Diebold experienced its most significant growth in Latin America, which includes the Brazilian market.
Overall revenue during the quarter in Latin America was $175.8 million, up 12.8% from $155.9 million.
Brazilian revenues increased partly because of an order of 30,000 voting machines for the country. In the financial sector, Diebold expects growth to continue in Brazil as banks in the region continue to deploy envelope-free ATMs.
As major financial institutions slowed installation of envelope-free ATMs because of economic concerns, Diebold saw its revenue in North America decrease 11% to $322.6 million from $362.5 million.
Diebold experienced more envelope-free ATM orders from regional banks and expects that trend to continue in the second half of 2010.
Overall revenue in the Asia-Pacific region increased 8%, to $90.4 million from $83.7 million. Swidarski also expects revenues to grow in the region during the second half of the year.
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