Continuing supply chain issues led to a 12.1% drop in revenue and a first quarter loss for Diebold Nixdorf, prompting the company to lower 2022 projections.
The company, which relocated its headquarters to Hudson from Green earlier this year, also announced plans to streamline operations and “focus on key value drivers for customers and shareholder.” It hopes the moves will lead to savings of more that $150 million over the next 12 to 18 months.
Diebold Nixdorf review:First quarter results are covered in a letter on the Diebold Nixdorf website.
Work to expand production at a facility in North Canton will be finished this year and help Diebold Nixdorf address some of its supply chain problems, Octavio Marquez, president and chief executive officer, told stock analysts during a conference call Tuesday morning.
For the quarter ended March 31, Diebold Nixdorf reported a $183.1 million loss, or $2.33 per share, compared with a loss of $8.1 million, or 10 cents per share, during the 2021 first quarter. Revenue fell to $829.8 million compared with $943.9 million last year.
The company reported declines in the services, products and software divisions in all three of its business segments — Eurasia banking, North American banking and retail equipment.
Supply chain, Ukraine war, virus among issues presenting challenges
Supply chain issues – getting raw materials and shipping products to customers – are among several challenges Diebold Nixdorf is facing, company officials said. As an example, Marquez cited the closing of some Chinese ports because of that country’s issues with the coronavirus.
The ongoing pandemic, war in Ukraine, growing inflation and uncertainty in financial markets also are creating challenges, said Marquez, who took over as top executive in March, replacing Gerrard Schmid, who joined the company in February 2018.
Marquez told analysts that the latest cost-cutting efforts will address supply chain issues, particularly efforts to get products and services to customers faster and more efficiently. The company will make changes to be closer to customers, he said.
The facility is North Canton — part of the Hoover District — will play a role in the restructuring as the site supplying customers throughout North America. The company consolidated automatic teller machine operations at the facility in 2019. The site also is home to research and development, engineering, manufacturing, logistics and supply chain teams.
Diebold Nixdorf projecting lower revenue in 2022
Diebold Nixdorf revised its 2022 revenue forecast to be lower — ranging between $3.7 billion and $3.9 billion — than earlier projections of $4 billion to $4.2 billion. The reduction includes $80 million in revenue lost because of the Russia’s invasion of Ukraine, the company said.
The company is making sales but supply chain issues are delaying efforts to fill orders, Marquez said.
“There is no lack of demand for our products,” he told analysts, adding that orders on backlog have a value of $1.2 billion.
Diebold Nixdorf’s retail business, which includes point-of-sale and self checkout machines, has grown. The company said orders for self checkout equipment has increased 125% over last year.
The company is picking up contracts to service electric vehicle charging stations in Europe and in North America. Marquez said the electric vehicle charging business is developing and Diebold Nixdorf hopes to be a driving force.
While the company hopes to generate $150 million of savings from the new restructuring program, the cost of the project hasn’t been determined. Jeff Rutherford, executive vice president and chief financial officer, said the company has a sense of urgency and hopes to move quickly with the program.
Marquez said the program likely will see the company further consolidating offices, something it did in Northeast Ohio under its last restructuring plan. During the pandemic, the company recognized that employees are able to work remotely as well as in an office.
The company has undergone a series of restructuring initiatives since the merger in 2016 of Diebold and Wincor Nixdorf, a German ATM and retail machinery maker.
Former president and CEO Andy W. Mattes launched DN2020 in a bid to cut $200 million from operations. The Diebold Nixdorf board dismissed Mattes in December 2017 and replaced him with Schmid, who launched DN Now, which also was designed to cut $200 million in costs.
Part of DN Now included shedding non-core businesses. The company also reduced personnel and consolidated operations. Diebold Nixdorf declared DN Now completed at the end of 2021.
Rutherford told analysts that DN Now was more of a top-down restructuring. He said the new program is aimed at eliminating inefficiencies.
Marquez told analysts that Diebold Nixdorf has leading hardware and software products, combined with good service of the products. The goal is to focus on growing the core offerings by doubling down and continuing to offer the best equipment and service, he told analysts.