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Kudelski hit by foreign exchange turbulence

Kudeslki blamed falling exchange rates for a 22% decline in revenues to CHF404.5 million (€357 million) for the first half of the year from CHF517 million a year earlier. It said declining exchange rates against the Swiss Franc had a negative impact of CHF67.0 million on its revenues and CHF27.4 million on operating income.

Digital TV revenues declined by CHF92.1 million to CHF257.6 million, while operating income declined by CHF59.8 million to CHF14.6 million. The strength of the Swiss Franc had a particularly negative impact on the digital TV segment. Currency effects had a negative impact of CHF46.5 million on segment revenues. Kudelski said that compared to a strong first half of 2010, digital TV constant currency revenues were 13% lower. Last year, Kudelski reported an exceptional 21.4% constant currency growth as it posted material revenues from the replacement of the Virgin Media installed base of smartcards. The number of smartcards delivered in the first half of 2011 declined by 6.5 million units to 13.9 million

In terms of its European operations, Kudelski’s Italian and Spanish digital-terrestrial business delivered a particularlystrong performance in the first half of last year, both in the core conditional access and in SmarDTV module businesses. However, the company pointed out that these sales had materially slowed down by the end of the year and in this first half of 2011 remained at roughly the same levels.

The company said it plans to intensify its cost saving programme in the second half of the year in response to continuing turbulence in the foreign exchange market and expects to see tangible results from this in 2012.