Cash never gets old at Diebold. The company is a leading global
producer of automated teller machines (ATMs). In addition, it
offers remote teller systems, cash dispensers, and check cashing
machines. Originally a manufacturer of safes, the company is still
active in its original market, offering products that include
vaults and security systems for financial institutions. It also
provides electronic voting machines in Brazil. The company's
related services range from traditional maintenance to remote
monitoring, transaction processing, and currency management.
Diebold, which has operations in more than 90 countries, gets more
than half of sales outside North America. In a major move, Diebold
offered $1.8 billion to buy its European rival Wincor Nixdorf.
The company's largest product segment, financial
self-service (FSS), includes ATMs and other financial machines and
accounts for 87% of revenue. The security segment (electronic
security systems and products) accounts for 12% of sales and the
contribution of election and lottery systems dropped to 1%.
North America (primarily the US) is Ohio-based Diebold's
largest market, accounting for 45% of the company's sales. Latin
America (including Brazil) brings in 20% of its revenue, with the
Asia-Pacific region generating 1% and Europe, Middle East, and
Africa at 17%.
Diebold's sales fell 12% to 7% to $2.4 billion in 2015 from $3
billion 2014. Revenue dropped in all business segments and all
geographies regions but the US where sale were flat. Overseas,
Diebold felt the impact of a strong dollar with currency exchange
rates working against it. The significant 32% droip in Latin
America sales were blamed on the weakening of the Brazil real and
other economic problems in Brazil. The company attributed a 12%
drop in Asia-Pacific sales on the move in China -- at the
government's behest -- to use of domestic ATM suppliers.
The company's profit slid some 36% to about $74 million in 2015
from $114 million in 2014. The lower revenue did its part, but
Diebold also had higher costs in 2015, including some related to
Diebold had to use more of its cash flow toward operations in
2015 finishing the year with $31 million, compared to $189 million
in 2014. Cash flow was affected by less income from continuing
operations, higher working capital, and reductions in deferred
Diebold's pending acquisition of Wincor Nixdorf would double
revenue to more than $5 billion. The deal would open Europe to
Diebold and, on the other hand, open the US to Wincor Nixdorf
products. Diebold positions the merger as a match between companies
with strong services and software components, areas that Diebold is
emphasizing as it changes its business model from a hardware
orientation to one focused on software. The Wincor Nixdorf board
has approved the deal and the companies were waiting on shareholder
and regulatory approval in early 2016. The companies expected the
deal to conclude in summer 2016.
Diebold also continues to implement its Diebold 2.0 turnaround
program that it started n 2013. Its aim is to transform Diebold
into a world-class, services-led and software enabled provider of
secure, convenient, and efficient products to customers. The four
key elements of Diebold 2.0 include: reducing costs and improving
near-term delivery and execution; generating increased cash flow;
recruiting and retaining top talent to drive innovation and execute
its transformation; return the company to sustainable, profitable
Diebold's growth strategy is focused largely on providing
software-oriented services; the company now generates more than 55%
of its revenue from services supporting its product lines. In 2015,
the moved to consolidate it business in Brazil and the rest of
Latin America, which has been run separately. The new structure is
to improve operational efficiency and improve customer service.
While the company's experience in Brazil has been bumpy recently,
it did capture a contract with one of the country's biggest
Mergers and Acquisitions
In 2015, Diebold acquired Phoenix Interactive Design, a software
developer for ATMs and other financial self-service applications.
The purchase is to accelerate Dieobld's growth in managed services
and branch automation. In 2014, Diebold acquired Cryptera, a
supplier of Diebold's encrypting PIN pad technology.