Letter to Shareholders

First Half 2020

For the first half 2020, total revenues and other operating income decreased by 20% to USD 320.1 million, with an operating profit, before depreciation, amortization, impairment and restructuring costs, of USD 4.94 million. Net loss for the period was USD 27.1 million. Despite this decrease, cash flow from operating activities materially improved during the first half to USD 41.9 million, confirming the efficiency of short-term measures taken by the Group during this difficult period.

The key drivers for the decline in the Group’s revenues during the first half 2020 were the impacts of the COVID-19 pandemic. Of the Group’s segments, Public Access suffered the most, though each of the Group’s business units ultimately experienced some level of negative impact.

Recurring Digital TV revenues were resilient, especially in advanced economies, but a number of discretionary projects were delayed or cancelled. Kudelski Security continued to expand its business in EMEA at a fast pace with a 46% growth compared with first half 2019, while the US technology reselling business was negatively impacted by pandemic-related lockdowns. Overall, Kudelski Security experienced a decrease of its top line, but at the same time, an increase in its margin after cost of goods in absolute terms and a positive evolution of overall backlog. SKIDATA’s business was also negatively impacted by the pandemic-related lockdowns around the world.  As markets reopen, though, SKIDATA’s activity is gradually getting back to normal. Kudelski IoT’s business performance was comparable to first half 2019. 

The COVID-19 pandemic was a stress test for the Kudelski Group. On the positive side, we have been able to transition smoothly and effectively to a work-from-home environment, while maintaining the business continuity of our critical infrastructure. As a result of our strong local presence in key markets, we were able to ensure that our clients could continue to operate our products and solutions without disruption, thereby confirming that we are a reliable partner. On the cost side, we were also able to take short term measures to improve our cost base, with the results already evident in our first half numbers.

We have clearly demonstrated that our company is able to operate in spite of the pandemic and that we are able to deliver upon our customers commitments.  On the negative side, the pandemic lengthens the sales cycles for many products and has caused several of our existing clients to focus on short term problems.  This has a negative impact on medium- and long-term projects, which have been often delayed, harming our revenues.

We expect that the post COVID-19 world will be very different from the world of just a few months ago.  Transformation is key to our ability to perform in the post COVID-19 environment. During the challenging days of the pandemic, we have not only taken the necessary measures to limit the short-term economic damage, but we have continued to adapt ourselves to the new reality and to look forward to new opportunities.

The negatives of the current pandemic are quite clear; however, we also see a number of new opportunities, such as the need to have touchless interfaces for our SKIDATA solutions in order to minimize the spread of disease. In our opportunity pipeline, we have joint solutions between our Digital TV and Kudelski Security business units to provide critical cybersecurity solutions to our Digital TV clients and, perhaps more interestingly, to our client’s subscribers. Other projects include video solutions for sports stakeholders that are building the post COVID-19 sports ecosystem.  As we look forward to the post COVID-19 world, we remain excited about the potential of the investments we are making to harness these opportunities for future growth.


The Group’s Board of Directors, executive management and employees are keenly focused on managing the many challenges of the COVID-19 crisis, while preserving our capabilities to innovate by continuing to make key investments in R&D activities.

In the second half 2020, the Group expects revenues in the Digital TV segment to be higher compared to the first half, as customers delayed projects originally scheduled for the first half into the second half. As we will continue to enforce strict cost controls, the Digital TV segment should improve its profitability in absolute terms compared to the first half.

In the Cybersecurity segment, the Group expects to generate higher revenues in the second half compared to the first half. As the Cybersecurity business continues to promote higher margin product lines, we expect margin after cost of material to continue growing.

Under the new leadership of Hardy Schmidbauer, the IoT segment is expected to grow during the second half.

The Public Access segment is also expected to improve its performance as its markets gradually get back to normal and as the business transformation efforts that we commenced last year start delivering its first tangible results.

We would like to take this opportunity to thank our clients, partners, employees and shareholders for their continued trust in this particularly challenging environment, where important efforts are required to deliver sustainable results for the future.

André Kudelski, Chairman and Chief Executive Officer

Published in 2020 Interim Report