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Giesecke & Devrient back on growth track

May 14, 2013 – Munich-based technology provider Giesecke & Devrient (G&D) was able to significantly expand its business activities in the past year. Group sales increased in fiscal 2012 by almost ten percent to 1.8 billion euros. During the same reporting period, Group earnings (EBIT) decreased to 95 million euros (prior year: 108 million euros). Net income for the Group was 39 million euros. G&D stepped up investment in research and development in order to exploit new business opportunities: at 128 million euros, spending was approximately 11 percent higher than in the prior year. Capital expenditure remained significantly above the level of depreciation and amortization, at 141 million euros.

“We saw a significant upturn in sales in 2012. All business units contributed to this growth. We continue to invest heavily in the relevant markets of the future,” said Dr. Karsten Ottenberg, Chairman of the Management Board of Giesecke & Devrient. “Without the sharply increased pressure on margins, our results would have exceeded the prior-year earnings.”
As a result of increased pressure on margins across all business units, G&D has set up programs to boost profitability, particularly in Mobile Security. “The profitability program in the Mobile Security unit is set to run for 18 months and targets an improvement of 60 million euros a year,” explained Dr. Peter Zattler, CFO and Director of Labor Relations at Giesecke & Devrient. “The program includes plans to reduce the headcount in Europe by 400 positions, 125 of which will be in Munich.”
The Banknote business unit, G&D’s strongest segment, generated net sales of 902 million euros in 2012, an increase of 16 percent compared to the previous year. All three divisions of the business unit contributed to this substantial growth. The Printing division performed well in an increasingly price sensitive market and gained market share. The Paper division benefited from growing global demand for banknote paper, the trend towards durable substrates, and new, high-quality security features. There was significant growth in the markets served by the Banknote Processing division, primarily due to rising international cash volumes leading to demand for innovative automation solutions.
The Mobile Security business unit operates in a market environment characterized by particularly strong competition and price pressure worldwide. Despite these challenges, the unit was able to generate sales growth of 30 million euros or five percent compared to the prior year, at 687 million euros. However, it was obviously the decrease in the net income that has led to the decision of cutting 400 jobs in Europe in exactly this unit. G&D hope to save $60 million per year.

In the Secure Devices division, a marginal drop in sales in the telecommunications business was offset by an encouraging level of demand in the payment, transit, and authentication segments. The Server Software and Services (3S) division was able to increase sales during the reporting period. Its technologies for safeguarding digital transactions, for example, when using a smartphone, are of key strategic significance. A total of 1.8 billion SIM cards worldwide are already managed by way of G&D solutions.
The Government Solutions business unit was able to boost its sales in 2012 by almost two percent to 201 million euros. Postponement of several major projects by customers had a dampening effect on results in the Government division. Reasons for these decisions include political change, in particular in the Middle East and North Africa. The wide-scale rollout of electronic healthcare cards in Germany had a positive impact on business. Overall, net sales were only slightly below the prior-year figure. The secunet division, which operates in the IT security market, posted a substantial increase in sales in 2012.
“We expect to see another significant increase in sales in the current fiscal year,” said Dr. Karsten Ottenberg. “At the same time, we anticipate a substantial improvement in earnings, which will again grow faster than sales. Business in the first quarter of 2013 confirms this expectation. Given the fast-paced nature of our markets, we will continue to drive our efficiency and innovation programs forward and invest heavily in new technologies.”

G&D announced in addition that Dr. Karsten Ottenberg (51), Chairman of the G&D Management Board, is leaving the company on his own accord, effective September 30, 2013 to become Chairman of the Board of Management of Bosch und Siemens Hausgeräte GmbH.
“We would like to thank Karsten Ottenberg for his great commitment. He has contributed significantly to the successful development of the G&D Group in the past years”, said Dr. Peter-Alexander Wacker, Chairman of the Supervisory Board.
Dr. Karsten Ottenberg has been CEO and Chairman of the Management Board of the Giesecke & Devrient GmbH Munich since April 1, 2005. Over the last eight years he has led the company, which specializes in banknotes and security solutions, into innovative new markets and stronger international growth. Before joining G&D, Ottenberg, holding a PhD in physics, spent 18 years at the Dutch Philips group in various management roles in Research and Development, Marketing and Sales as well as being responsible for integrated business divisions on the board of the company’s semiconductor division.
His successor will be announced in due course.

For more information visit the G&D website.

On cutting job in the mobile unit reported the New York Financial Times.

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