Oberthur Card Systems Sales Grows 17% in First Quarter 2005

During the first three months of the year, the company delivered 43 million microprocessor cards, compared to 34 million in Q1 2004, a 27% increase year-on-year. - With 19.6 million cards delivered, vs. 20.5 million the previous year, sales of payment cards -- EUR 31.7M -- decreased by 6.5%, versus the first quarter 2004, which had been marked by an exceptional card re-issue program in Switzerland. Notwithstanding these volumes, shipments in the payment market grew by 10% on a year-on-year basis. - In the mobile sector, sales reached a Q1 historic level at EUR 36.6M, an increase of 65% in volume on a year-on-year basis. During this period, volumes delivered were up 7.8 million due to significant orders in Russia, Asia, Middle East and Latin America. While average selling prices decreased by 7.5% due to the very competitive environment, the product mix improved once again with 64K and higher memory SIM cards reaching 79% of sales. - Sales in the Identity & Security segments reflect the first successes of Oberthur Card Systems unique positioning in this sector, with an increase of 80.8% compared to Q1 2004. Most of the increase for this segment comes from the Pay-TV market and sales of identification cards. The company shipped 3.6M cards, compared to 1.5M during Q1 2004 -- up 139.4% in volume year-on-year. Sales in the Other Cards segment -- magnetic stripe cards, scratch cards and memory cards -- amounted to EUR 18.8M, an 11.9% increase year-on-year. Volumes of payment magnetic stripe cards increased significantly in the United States because of the strong development of new markets such as prepaid gift cards. Sales in Services & Solutions were up 2.6% year-on-year, reaching EUR 22.2M. This segment, comprised mainly of personalization services, shows contrasted results by geography. In Europe, where the migration to EMV pushes more and more banks to rely on Oberthur Card Systems, sales increased by 16.7%. In the US, personalization activities were strong in the payment sector but registered an expected decrease in the long-distance carriers segment. Outlook Current trends should be confirmed within the next months: - In the payment sector, shipments of microprocessor cards in France, Benelux, Eastern Europe, Italy and Asia should add to the large deployment of contactless technology in the US and should sustain the growth in the payment activity. - In mobile communications, Oberthur Card Systems can expect to take advantage of the momentum experienced in Q1 due to its strong position with telecom operators and the acquisition of 40 new clients since 2004. Furthermore, Oberthur Card Systems recent selection by a major US carrier validates the arrival of the company in that region. - In the Identity & Security segments, the position of the company and the emergence of large markets should encourage a sustained level of activity. This very good Q1 shows Oberthur Card Systems capability to grow in every market. In the coming months, the company will continue its efforts to reach a high level of growth for FY 2005 while sticking to its profitability strategy.