Gemalto to Boost Spending as Investments, Dividend Rise

Gemalto NV (GTO), the maker of chips and software that help make bank cards and mobile phones secure, said spending will increase this year as it pushes into more products as part of a growth plan and boosts its dividend.

Full-year net income rose 25 percent to 201 million euros ($260 million) as sales gained 11 percent to 2.25 billion euros, Amsterdam-based Gemalto said today. Analysts predicted profit of 203 million euros on sales of 2.2 billion euros. The dividend rises to 34 cents a share, a 10 percent boost from 2012.

Gemalto, which competes with Germany’s Giesecke & Devrient GmbH and France’s Oberthur Technologies SA, is seeking to expand in areas such as mobile payments to boost growth. An increase in investments will lead to greater swings in profit from operations between the two halves of 2013, Gemalto said. The company projected “double digit” sales growth for 2013.

“The guidance for 2013 is great, but they invested a little more than expected last year, which weighed on operating profit,” said Sebastien Sztabowicz, a Kepler Capital Markets analyst in Paris. “It’s normal to have some profit-taking today, especially given how well the shares have performed.”

Operating profit last year was 305 million euros, trailing Sztabowicz’s estimate of 315 million euros. Gemalto had targeted 300 million euros.

Gemalto fell 0.9 percent to 71.49 euros at 10:23 a.m. in Paris. The stock has been trading on France’s leading CAC 40 index since Dec. 24 and rose 52 percent over the past 12 months.

No ‘Revolution’

Gemalto is preparing to unveil a new long-term development plan in the second half, after reaching its 2013 operating profit target -- set in 2010 as part of a three-year strategic plan -- a year early.

The next phase of the company’s development will be an extension of existing businesses, Chief Executive Officer Olivier Piou said on a conference call.

“Our development will be essentially organic. Don’t expect a big revolution,” Piou said. “That shows you the confidence we have in our existing businesses and the potential there is to develop them.”

Gemalto will focus on new applications such as mobile money and mobile identification in the coming years, Piou said.

Piou, the 54-year-old executive who has run Gemalto since it was created in 2006 through the merger of Gemplus International SA and Axalto Holding NV, has been refocusing the company from older commoditized smart chips to new security technology. Piou is betting on the ramp-up of mobile payments and machine-to-machine transmissions, as well as new opportunities with companies such as Facebook Inc. (FB)

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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