Kudelski cracks code for record results

Profit-on-demand: The digital TV boom is good news for Kudelski Keystone

Digital technology group Kudelski has announced its best annual results, with net profit more than doubling to SFr77.2 million ($66.5 million).

This content was published on February 28, 2005

Total revenue rose 50 per cent to SFr619 million, and operational profit – earnings before interest and tax (Ebit) – increased an impressive 908 per cent to reach SFr101.5 million.

Kudelski, a world leader in the field of digital encryption technology for television broadcasts, says the improved results were largely down to renewed demand in the digital TV industry.

The company, which is based near Lausanne, says revenues from the digital TV sector rose by 93 per cent – accounting for more than two-thirds of total revenue.

The latest figures, published on Monday, confirm Kudelski’s 2003 turnaround, in the wake of a 2002 slump that pushed digital TV operators to huge losses.

Liquidity also improved, with net operating cash flow up to SFr78.4 million after dipping below zero in 2003.

Looking ahead to 2005, Kudelski predicted revenue of SFr670 to 690 million and Ebit between SFr110 and 120 million.

Too conservative?

Investors appeared unconvinced by the outlook, with the share price dropping slightly in morning trading on Monday after rallying last week.

Analysts described the forecast as "rather conservative", in the wake of the 2004 results.

They said the big question mark now was whether Kudelski would finally announce a long-awaited contract from major broadband television and Internet company UPC.

While Kudelski had broadened its client base in 2004 to reduce dependence on major customer Echostar (a United States satellite TV company), the new customers were mostly smaller names.

Kudelski’s main competitor is the NDS Group, a subsidiary of Rupert Murdoch’s News Corporation.

swissinfo with agencies

Key facts

Kudelski makes software to encrypt broadcasts and smart cards to decode digital television signals.
The 2004 results beat market expectations, but still failed to convince shareholders.
Analysts say Kudelski’s 2005 forecast is less impressive than its 2004 results and they are still waiting for a much-heralded new contract with TV operator UPC.

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