Kudelski sees progress
August 21, 2012
Kudelski says stable revenues and a streamlined cost base drove first half 2012 Group results. Compared to prior periods, currency effects had a minor impact.
Group revenues in constant currency declined by 1.8 per cent, while reported revenues dropped by 3 per cent compared to the first half of last year, reaching CHF 380.3 million. Public Access posted a sales increase of 2.9 per cent in constant currency, while Digital TV Solution constant currency revenues declined by 3 per cent.
Weak economic environment continued to affect the European Digital TV business generating revenues of CHF 133.3 million with; in particular, revenues from Italy, Spain, France and Portugal declining by CHF 25.4 million compared to the first half of last year. The American business, on the other hand, posted a 3.3 per cent constant currency growth, reaching CHF 115.4 million in this first half. Asian segment revenues amount to CHF 53.8 million, roughly at the same level of the previous first half.
Considering last year’s divestment of the audio business, Polyright, EmbedICs, Medioh and Nagra Thomson Licensing, constant currency revenues for the current perimeter of consolidation were roughly at the same level as the first half 2011.
The company says emerging markets sustained the Group’s Digital TV business in this first half. Once again, a strong demand for the Group’s products in Latin America drove first half’s revenues, with Brazil delivering solid double digit revenue growth. Other South American markets are following the same path: at the beginning of June, Entel, a large telecom provider in Chile, has launched a solution based on Nagra advanced security solution. Furthermore, other markets, such as the Indian market, delivered a strong first half with, in particular, the shipment of half a million iDecode-based devices with embedded security in the cable market.
Following the appointment of Joe Chernesky to Senior Vice President of Intellectual Property in May 2012, the Group completed the set-up of the new Intellectual Property unit. The unit, managing a portfolio of over 4’000 patents worldwide, is now operational and has started engaging in licensing discussions with companies using patented Group technologies.
Cyber security set-up is on track. The Group will provide a comprehensive update with the official launch of this unit planned for November 2012.
The Group’s Internet TV solutions continue to gain traction. To sustain the momentum of its Internet TV business, the Group has consolidated the relevant teams into a single product unit. Mediaset has subscribed to the Content Delivery Service provided by Nagravision as part of its Multiscreen Cloud Service. Other lead customers such as PRISA TV and Abertis are deploying a Nagravision-based OTT (Over-the-Top) platform. PRISA TV has reached an installed base of 250’000 Nagravision-powered OTT HD devices providing live national football league events and premium content from the main studios. Furthermore, following the announcement of the strategic partnership with Abertis, the joint cloud-based service aimed at pay-tv service providers and free-to-air broadcasters is successfully on-air. Production trials with eight European broadcasters are currently on-going.
The Group reported a CHF 2.1 million operating loss for the first half. Net of restructuring costs, the Group posted a CHF 17.7 million operating income. The net loss for the period was at CHF 9.0 million, representing a CHF 2.5 million improvement from the prior first half.
In the first half, the Group generated CHF 26.3 million cash from operating activities. The Group used CHF 11.8 million cash for investing activities, due a tight control of capital expenditures. Cash used for financing activities amounts to CHF 17.6 million.
For the second half, the Group expects a favourable seasonality, yet less pronounced that in previous years, in the Digital TV Solutions segment. Furthermore, Digital TV Solutions results will benefit from the positive impact of the restructuring program. Public Access will experience a similar seasonality as in previous years, generating a positive operating income for the full year.
Solid Digital TV Solutions fundamentals and favorable currency effects are expected to result in a higher than expected Group total revenues and operating result. On this basis, the Group is updating its total revenue guidance from CHF 830 to 855 million to a new range of CHF 855 to 875 million. Similarly, the Group raises its operating income ex-restructuring costs guidance from CHF 35 to 50 million to a new range of CHF 50 to 65 million.