Card-issuing and personalisation equipment maker Matica is girding itself for a momentous 2009. Operating from near Milan, the company is preparing for an expansion drive that it hopes will transform it from a modestly sized concern with a poor profits record, annual sales of £10 million and a stock market value of £2.7 million into a major player in the lucrative markets of the USA and Asia.

To achieve this, Matica must mount a challenge to Datacard, a private group with annual sales of nearly £220 million that dominates the scene with a US market share of more than 90 per cent. From his headquarters in Como, chief executive officer Sandro Camilleri has devised a strategy to knock the mighty Datacard off its perch, which he is about to put to the test.

Matica, whose products include machines for issuing and personalising credit, debit, SIM and smart cards, as well as ID cards, membership, loyalty and other types of card, has formed a 50-50 joint venture in Minnesota, Matica Americas. The company, which says it will not compete on machine prices but claims its products enable customers to cut their card production costs, is also putting the finishing touches to a new, flexible, modular machine, which can handle all personalisation tasks and be adapted for new uses by a simple software change. Camilleri plans to have this machine on the market next year.

Meanwhile, he argues that Datacard gave Matica a ‘once in a lifetime opportunity’ not so long ago when it told its distributors that its existing machines were obsolescent and that their contracts would expire in 2012 with new lines not available until 2014.

Himself a former Datacard distributor, Camilleri maintains that Matica already has ‘machines to match all Datacard’s existing products’ and suggests that some of its new products will be industry leaders. Matica’s chairman, US entrepreneur and former Datacard boss Gary Holland, says that, although the European market is ‘mature’, the global market is growing at 15 per cent a year, and that Matica is soon to establish a presence in the Asia-Pacific region.

Steve Blake, head of Matica Americas and another émigré from Datacard, declares confidently ‘we’re taking on the big boys’. Elsewhere, the company intends to pitch for the UK ID market, if it comes about, and is targeting security and ‘high-end’ business.    
Matica has a Swiss holding company, and Camilleri, himself resident a few miles away in Switzerland, exercises control through family interests.

The company turned a €200,000 (£155,000) loss into a first-half €500,000 pre-tax profit, on turnover increased 11 per cent to €7.6 million in the six months to June, helped by winning ‘significant’ contracts from Spain, Poland and the Ukraine.

Blaming 2007’s full-year loss of €1.4 million on relocation and acquisition costs, Matica has already added to its product range with last year’s acquisition of two other groups, Digicard and Fractalos.

Matica, which has put more than £1 million into Matica Americas so far, is already well informed about its big competitive target. The company recently beefed up its board by recruiting Veraje Anjargolian, a former divisional chief at Nasdaq-quoted bar code specialist Zebra Technologies, as a non-executive director.

Canny distributors express enthusiasm about the new modular machine, though they warn that Datacard can be expected to fight back vigorously to defend its market position. Analysts argue that the US investment could depress profits in the short term, though it should pay off thereafter.

Floated last year at £1, Matica shares have lost ground heavily and now trade at a mere 26.5p. If Camilleri’s well-laid plans bear fruit in the face of powerful competition, they could be in line for a rerating.

Matica	AIM	£4.03m	40.00p	0.00p
Click here for interactive charting
Other company articles:
Matica ‘takes on the big boys’			06/10/2008
Interim turnaround at Matica			22/09/2008
Matica strengthens its team			04/09/2008
Matica in US tie-up			16/07/2008
Good reception for phone retailer			12/04/2007