Cash is king at Diebold. The company is one of the leading
global producers 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 half
of sales outside North America.
North America (primarily the US) is Ohio-based Diebold's
largest market, accounting for half of the company's sales. Latin
America (including Brazil) brings in 20% of its revenue, with the
Asia-Pacific and EMEA (Europe, Middle East, and Africa) regions
contributing in the neighborhood of 15% each.
The company's largest product segment, financial self-service
(FSS), includes ATMs and other financial machines and accounts for
about three-quarters of revenue. The security segment (electronic
security systems and products) accounts for more than 20% of sales;
election and lottery systems contribute less than 1%.
In recent years Diebold's sales growth has been inconsistent: up
one year and down the next. In 2013 the company's sales declined 4%
versus 2012, to $2.86 billion. Net income swung from $78.5 million
in 2012 to a loss of nearly $182 million in 2013. Cash flow from
operations continued on its downward trajectory. Sales from
services were essentially flat (up less than 1%) in 2013 compared
with 2012, while product sales declined by 11% year over year. On a
geographic basis sales in North America and Latin America declined
11% and 6%, respectively. Both Asia-Pacific and EMEA (Europe, the
Middle East, and Africa) posted gains of 12% and 11%, respectively.
Sales in Brazil fell 8%.
Amid falling sales and profits, Diebold in late 2013 unveiled a
multi-year turnaround strategy called Diebold 2.0. 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 growth.
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.
The company has been taking steps to become more efficient in its
manufacturing, procurement and logistics, and product development,
as part of a multiyear program aimed at reducing its costs. Its
efforts have included consolidation of its manufacturing and
distribution operations in the EMEA (Europe, Middle East, and
Africa) region, as well as job cuts.
Mergers and Acquisitions
Diebold continued to expand its expertise in financial security
beyond North America in 2012. That year the company acquired GAS
Tecnologia, an Internet banking, mobile banking, and online payment
security company based in Brazil. GAS secures nearly 70% of the
Internet banking transactions in Brazil by serving many of the
country's major financial institutions. The purchase complements
Diebold's existing operations in Brazil, which serve the financial,
commerce, industry, government, and health care segments. Also that
year the company acquired Altus, a Turkish provider of IT services
to the financial industry.