Ingenico turns to Asia after US setback

French payment terminal group Ingenico has turned its focus to services and emerging markets to drive growth after it was forced to abandon a key acquisition in the United States designed to help it take on US giant VeriFone. Ingenico Chief Executive Philippe Lazare sees "significant room for improvement" in south-east Asia and is looking for take-overs in the region, where the company is already market leader in China, he told Reuters on Friday.
"Last year confirmed that emerging countries really are the top engines of growth and that our business model consisting of a growing part of services as opposed to hardware is a working strategy," Lazare said in an interview. The company was forced to rethink its strategy last year after regulators prevented it from buying Hypercom's US business to avoid unfair competition in a deal that saw VeriFone take over most of Hypercom's assets.
The Paris-listed maker of payment terminals for the retail industry has now resigned itself to organic growth in the US, where 2011 sales fell 22 percent but contracts such as with Walmart and Home Depot make it the No. 2 player. Still, Lazare hopes the chip-and-pin EMV norm already in place in Europe, and which could fast become the new reference in the US, will give it fresh momentum as retailers renew their terminals to comply.
In Asia-Pacific, meanwhile, sales grew 28 percent last year to 168 million euros ($222 million), 17 percent of the total, while Germany remained its top market. Ingenico, which also competes with Gemalto, First Data and Heartland Payment Systems, is also betting on a shift towards services such as transaction management and terminal maintenance, away from its core business of making and selling payment terminals.
Such business should generate 40 percent of revenue by next year, up from 32 percent currently, Lazare said. Ingenico said last month it hit its 2013 group earnings targets ahead of schedule, and Lazare plans to give updated goals towards the end of the first half of the year.
The CEO sees first-quarter sales growth in line with its full-year forecast of at least 8 percent like-for-like and confirmed that its 2012 core margin would be similar to or above last year's level. Ingenico shares, which peaked in the dotcom bubble at more than 85 euros and hit a low of 4.6 euros in 2003, have steadily risen since the start of 2009 and are up almost 30 percent this year at around 35 euros.