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Main » 2019 » February » 19 » Gemalto Full Year 2018 Results
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Gemalto Full Year 2018 Results

• 2018 full year results delivered in line with expectations

• Full year revenue at €3 billion with Identity, IoT and Cybersecurity segment revenue up +11% at constant exchange rates

• Profit from operations at €332 million, up +7%

• Thales transaction expected to close in Q1 2019, 11 of 14 Regulatory Clearances obtained

AMSTERDAM-Thursday 14 February 2019 [ AETOS Wire ]

(BUSINESS WIRE) -- Regulatory News:

Gemalto (Euronext NL0000400653 - GTO), the world leader in digital security today announces its results for the full year 2018.

Key figures of the adjusted income statement

 

 

 

 

 

 

 

 

 

 

 

 

Year-on-year variations

(€ in millions)

 

 

 

Full year

2018

 

 

 

Full year

2017

 

 

 

at historical
exchange rates

 

 

 

at constant
exchange rates

Revenue

 

 

 

2,969

 

 

 

2,972

 

 

 

=

 

 

 

+3%

Gross profit

 

 

 

1,099

 

 

 

1,105

 

 

 

(1%)

 

 

 

 

Operating expenses

 

 

 

(767)

 

 

 

(795)

 

 

 

(4%)

 

 

 

 

Profit from operations (PFO)

 

 

 

332

 

 

 

310

 

 

 

+7%

 

 

 

 

PFO as % of revenue

 

 

 

11.2%

 

 

 

10.4%

 

 

 

+0.8 pp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Philippe Vallée, Chief Executive Officer, commented: “Gemalto’s 2018 results reflect its success at implementing its strategic priorities with a return to the Company’s historical pattern of growing profits.

In the Identity, IoT & Cybersecurity segment, double digit revenue growth was fueled by the broadening of our portfolio in a dynamic Governments market, by the growing enterprise demand for cloud-based cybersecurity solutions and by the rapid expansion of IoT connectivity for industrial applications. In these businesses, Gemalto continued throughout the year to increase its marketing and R&D investments in order to strengthen its long-term competitive positioning. In the Smartcards & Issuance segment, the Payment business stabilized in large part due to the US EMV normalization, while the removable SIM continued to decrease in line with expectations. The sound execution of the Company’s transition plan, its portfolio optimization and selective approach of business opportunities delivered solid profit margin in 2018.

Moving forward, in the Identity, IoT & Cybersecurity segment, we anticipate strong demand for border management and biometric solutions driven by the sharp increase in air traffic and evolving law enforcement needs. We also expect an acceleration in deployments of cloud-based cybersecurity solutions in line with stringent regulation and more high-profile breaches. We should also see a proliferation of power-sensitive IoT connectivity use cases across various industrial sectors. In the Smartcards & Issuance segment, demand for both payment cards and digital payment should increase in line with cashless trends. In parallel, removable SIM demand will continue to gradually shift toward eSIM as an increasing array of devices use dematerialized connectivity.

In this context, our strategic priorities are confirmed. We will continue to invest in the fast growing Identity, IoT and Cybersecurity segment. In Smartcards & Issuance, we will pursue the digitalization of the segment while leveraging our strong market positions.

As the Thales transaction comes to a close, we are fully prepared to join forces with the Thales teams in order to accelerate the deployment of Gemalto’s strategic plan in the digital security market.”

Basis of preparation of financial information

Segment information

The Identity, IoT & Cybersecurity segment comprises businesses associated with homeland security for governments (“Governments”), IoT connectivity for industrial applications (“IoT”) and cybersecurity for enterprises (“Cybersecurity”).

The Smartcards & Issuance segment comprises businesses mainly associated with removable SIM cards (“SIM”), payment cards (“Payment”) and their issuance services. The segment includes as well businesses associated to the digital transformation of smart cards (“Digital”) such as digital payment, digital banking, remote subscription management, embedded SIM/MIM and embedded secure elements. Patents business is also included in this segment.

Historical exchange rates and constant currency figures

The Company sells its products and services in a very large number of countries and is commonly remunerated in other currencies than the Euro. Fluctuations in these other currencies exchange rates against the Euro have in particular a translation impact on the reported Euro value of the Company revenues. Comparisons at constant exchange rates aim at eliminating the effect of currencies translation movements on the analysis of the Group revenue by translating prior-year revenues at the same average exchange rate as applied in the current year. Revenue variations are at constant exchange rates and include the impact of currencies variation hedging program, except where otherwise noted. All other figures in this press release are at historical exchange rates, except where otherwise noted.

Adjusted income statement and profit from operations (PFO) non-GAAP measure

The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) and with section 2:362(9) of the Netherlands Civil Code.

To better assess its past and future performance, the Company also prepares an adjusted income statement where the key metric used to evaluate the business and make operating decisions over the period 2010 to 2018 is the profit from operations (PFO).

PFO is a non-GAAP measure defined as IFRS operating profit adjusted for (i) the amortization and impairment of intangibles resulting from acquisitions, (ii) restructuring and acquisition-related expenses, (iii) all equity-based compensation charges and associated costs; and (iv) fair value adjustments upon business acquisitions. These items are further explained as follows:

  • Amortization, and impairment of intangibles resulting from acquisitions are defined as the amortization, and impairment expenses related to intangibles assets and goodwill recognized as part of the allocation of the excess purchase consideration over the share of net assets acquired.
  • Restructuring and acquisitions-related expenses are defined as (i) restructuring expenses which are the costs incurred in connection with a restructuring as defined in accordance with the provisions of IAS 37 (e.g. sale or termination of a business, closure of a plant,…), and consequent costs; (ii) reorganization expenses defined as the costs incurred in connection with headcount reductions, consolidation of manufacturing and offices sites, as well as the rationalization and harmonization of the product and service portfolio and the integration of IT systems, consequent to a business combination; and (iii) transaction costs (such as fees paid as part of an acquisition process).
  • Equity-based compensation charges are defined as (i) the discount granted to employees acquiring Gemalto shares under Gemalto Employee Stock Purchase plans; (ii) the amortization of the fair value of stock options and restricted share units granted by the Board of Directors to employees; and the related costs.
  • Fair value adjustments over net assets acquired are defined as the reversal, in the income statement, of the fair value adjustments recognized as a result of a business combination, as prescribed by IFRS3R. Those adjustments are mainly associated with (i) the amortization expense related to the step-up of the acquired work-in-progress and finished goods assumed at their realizable value and (ii) the amortization of the cancelled commercial margin related to deferred revenue balance acquired.

These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with IFRS.

......................

 

Contacts

Investor Relations
Jean-Claude Deturche
Mr.: +33 6 2399 2141

jean-claude.deturche@gemalto.com

Corporate Communication
Isabelle Marand
Ms.: +33 6 1489 1817

isabelle.marand@gemalto.com

Media Relations Agency
Suzanne Bakker
Ms.: +31 6 1136 8659

suzanne.bakker@citigateff.nl

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