ATM maker Diebold Inc. (DBD), Tuesday reported a swing to loss in the first quarter from a profit last year, hurt mainly by lower sales and a significant drop in gross margins. The company also indicated cutting 700 jobs as a cost cutting measure.
North Canton, Ohio-based Diebold's first-quarter loss was $13.4 million or $0.21 per share, compared to a profit of $45.2 million or $0.71 per share last year.
On an adjusted basis, loss for the period was $0.04 per share compared to earnings of $0.74 per share. On average, seven analysts polled by Thomson Reuters expected earnings of $0.16 per share for the quarter. Analysts' estimates typically exclude special items.
Henry Wallace, Diebold executive chairman, said, "While the first quarter results we are announcing today are disappointing, they are in line with our internal forecasts. The dramatic mix shift in North America from higher-margin regional accounts to lower-margin national accounts, and the strong second-half earnings bias in Asia Pacific and Latin America/Brazil, resulted in an unusually weak first quarter."
Diebold is one of the largest makers of ATM machines, and also makes security products such as vaults, alarms, and safes.
Diebold sales for the quarter dropped 9.3 percent to $633.5 million from $698.5 million last year. Analysts estimated revenues of $659.01 million for the quarter.
Diebold said revenue decline mainly reflects lower volumes in North America due to expired regulatory deadlines. Internationally, the growth in Asia Pacific and EMEA was nearly offset with lower volume in Latin America, including Brazil.
Gross margin for the first quarter declined 7.2 percentage points to 20.5 percent from last year.
Looking forward to 2013, the company continues to expect adjusted earnings to be flat-to-down moderately on relatively flat revenues.
Separately, Diebold said it plans to reduce its cost structure by $100 million to $150 million in order to help stabilize its financial position and to invest in key growth initiatives.
The restructuring actions include the reduction of about 700 full-time job positions, primarily in North America, rationalization of manufacturing facilities by selling operations in Virginia and North Carolina.
A substantial portion of the actions necessary to achieve the targeted savings is expected to be completed by the end of 2014, with total savings anticipated to be fully realized by end 2015.
DBD is currently trading at $29.20, down $0.95 or 3.15%, on the NYSE.
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