TV drags down Kudelski

Switzerland’s Kudelski Group, owner of Nagravision, has revealed its 2011 annual results. Group revenues in constant currency declined by 3.8 per cent from CHF 1.069 billion (€887m) in 2010 to CHF 896.6 million in 2011, with the Digital TV segment driving most of the decline

The continued fall of USD and Euro rates affected the Group’s 2011 financial results, with a negative impact of CHF 121.7 million on full-year revenues and CHF 46.5 million on operating income. Operating income for the year amounts to CHF 25.4 million compared to a CHF 110 million in 2010. Net of restructuring costs, the Group’s 2011 operating income was CHF 35.3 million. 2011 cash flow generation was strong, with an operating cash flow for the year at CHF 86.7 million.

The company said structural developments in the Digital TV segment remained positive, with new customer wins, a positive traction for the Group’s latest generation of products, and selected regions, such as Latin America, continuing to deliver strong growth in constant currency.These developments could only partially compensate the economic slowdown in Southern Europe. Furthermore, 2010 was positively impacted by certain one-off contributions, which were not available at the same levels in 2011, including revenues from a card replacement program at Virgin Media and a one-off other operating income from government grants. In 2011, operating income for the Digital TV segment declined by CHF 100.5 million to CHF 28.9 million.

The Public Access segment continued to grow its revenue in local currency and, as it was less affected by currency fluctuations, it raised its operating income to CHF 12.5 million

2011 also saw the turnaround of the Middleware and Advertising segment reach another important milestone, with the segment reverting to profitability on a full year basis

The Group’s restructuring program announced late last year has already delivered its first tangible results, with CHF 15.8 million in savings realized in 2011. The series of measures aimed at reducing the Group’s total annual operating expenses by CHF 90 million are progressing according to the Group’s original plan

Personnel expenses decreased by CHF 26.0 million in 2011, primarily due to currency effects. Compared to the end of 2010, total headcount decreased by 69 to 2’999 FTEs at the end of 2011. This headcount includes 100 FTEs in the Group’s newly organized operations in India. However, this figure does not reflect the impact of the restructuring announced by the Group late last year, which is being implemented during the first months of 2012

The Group reduced other operating expenses by CHF 44.9 million in 2011, a 19.2 per cent reduction from the prior year. In addition to the currency-driven reduction, the lower cost base reflects initial efforts undertaken by the Group as part of its overall cost-reduction program. Compared to the previous year, aggregate development, engineering, legal, expert and consultancy expenses in 2011 were reduced by CHF 24.9 million. The ongoing systematic replacement of external resources with lower cost internal resources has helped drive this cost reduction

Cable, satellite and telco service providers are increasingly turning to NAGRA for its expertise and innovation capabilities to enable an Internet-connected environment for their viewers as a natural extension to their existing services.

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