Germany-based Giesecke & Devrient is cutting 400 jobs in its mobile security unit, with all the cuts planned for Europe.
The company, the No. 3 smart card vendor worldwide and also a major producer of banknotes, saw its net income decrease for at least the fourth straight year in 2012 to €39 million (US$51.5 million). It was €111 million in 2008.
G&D’s mobile security division includes production of SIM and banking smart cards, as well as trusted service management for NFC secure elements and other over-the-air management of SIM cards. The job cuts include 125 positions in G&D’s Munich headquarters.
UPDATE: “The reduction will not affect the TSM business,” a G&D spokesman told NFC Times, contending that G&D is “well-positioned in the market of NFC, and we are still investing into the new business fields.”
The company said in its announcement Wednesday that the mobile security unit “operates in a market environment characterized by particularly strong competition and price pressure worldwide.” The lower margins have hit G&D's SIM and payment smart card business, the spokesman confirmed to NFC Times. END UPDATE.
G&D hopes to save €60 million per year with the job cuts and other reorganization. The mobile security division had 5,420 employees at the end of 2011.
Revenue increased in the division by 5% in 2012 to €687 million. That is an improvement from 2011, in which revenue fell in the division by 12.7% to €657 million. The company blamed much of the decrease to a significant drop in sales of payment smart cards, compared with strong sales of payment chip cards a year earlier.
Overall, privately owned G&D saw sales in 2012 increase by nearly 10% to €1.8 billion. That was driven largely by a 16% increase in revenue in G&D’s largest segment, banknotes, which had sales of €902 million.
The company’s government solutions division, which includes ID and health cards and travel documents, as well as authentication for secure electronic transactions, grew by only 2% to €201 million. G&D attributed the stagnant sales to postponement of several projects by governments and other customers. But the rollout of electronic health cards in Germany boosted revenue and the secunet IT security unit also had a substantial increase in sales.
“We expect to see another significant increase in sales in the current fiscal year,” said CEO Karsten Ottenberg in a statement. “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.”