…Posts Revenue Loss
By Cyber Era Staff
Global digital security leaders, the Kudelski Group Thursday, February 27, 2010 announced its 2019 annual results, with total revenues and other operating income decreasing from US$919.7 million to US$827.3 million.
This evolution was mainly driven by the Digital TV segment, which posted a US$61.3 million decline, reflecting the trend seen in emerging markets. In the Public Access segment, European sales increased by 8.8 per cent in constant currency, while in the Americas, sales decreased 16.5 per cent compared to the previous year.
Cybersecurity revenues shifted from lower margin technology reselling to higher margin advisory services, managed security services and proprietary technology sales. IoT generated marginal revenues as the segment’s primary focus continues to be the development of a secure IoT platform solution for the market.
Overall, the Group reduced 2019 operating expenses by US$81.7 million, including US$56.8 million of cost savings achieved with the ongoing restructuring program, net of the cost of additional investments in the Group’s key growth areas. Group EBITDA, excluding restructuring costs, was US$81.4 million, a US$5.5 million increase over the previous year.
The Group booked a US$38.6 million net loss for 2019, including a total of US$45.0 million of one-off costs from restructuring and from the tax effect of such restructuring measures.
In 2019, the Group generated US$34.2 million of cash flow from operating activities, compared with a US$4.7 million in 2018. Cash generation significantly improved in the second half to US$36.2 million compared to a first-half operating cash flow of US$2.0 million. The main driver of the year-on-year improvement is the reduction of trade accounts receivable, which generated US$58.8 million of cash in 2019.
In-depth Transformation Of Group Operations
The Group continued the transformation of its Digital TV organization to further enhance its operational efficiency, lay the foundation for future growth and consolidate its position as a world leader in this sector. Several key structural changes were made to the organization, including the merger of product units into a consolidated entity to deliver a more coherent offering to the market. In June 2019, the Group appointed Nancy Goldberg as Executive Vice President and Chief Marketing Officer, DTV, succeeding Pierre Roy.
The Group united its security brands for the first time at the 2020 CES, demonstrating the compelling value proposition of its end-to-end digital security ecosystem, which spans content protection, IoT and cybersecurity and leverages the strong synergies between Group entities.
The Group initiated a turnaround plan for SKIDATA in July 2019 and appointed David Luken as the new CEO of SKIDATA, with the objective of improving both cash flow generation and profitability.
The Group completed an in-depth review of SKIDATA’s operations, defining a blueprint for operating improvements aimed at building an optimized operating model. A first wave of measures was completed with a focus on SKIDATA’s US operations, including, in particular, the merger of formerly independent entities, the introduction of Group ERP and supply chain tools, a clean-up of the project portfolio, and the integration and streamlining of critical functions. To accelerate the implementation of its restructuring plan, the Group also replaced SKIDATA’s General Manager for the US.
During 2019, Kudelski Security executed several operational changes in order to better enable the implementation of its growth strategy. Such changes include the regional alignment of management and resources for closer client relationship and support, the increased focus on the development of high added value products and increased collaboration with other Kudelski Group business entities. In August 2019, Andrew Howard was appointed as CEO of Kudelski Security.
IN 2019, the Group undertook optimization of portfolio and extension of key customer relationships in digital television(DTV), strengthened its partnerships with market-leading telecommunications operators in developed markets. During the same period under review, Kudelski reinforced its operational focus for growth in cybersecurity, among other milestones.
For 2020, the Group expects EBITDA to be between US$70 and US$90 million and positive net income.
Taking into account the Group’s 2019 results and profitability outlook, the Board of Directors is proposing a CHF 0.10(US$0.10) cash distribution per bearer share for approval at the 2020 Annual Shareholders’ Meeting. It is proposed that CHF 0.05 of this cash distribution be treated as a return of capital.