Kudelski Group Opens a U.S. Headquarters in Phoenix

Results will be reported in U.S. currency in 2017
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CHESEAUX-SUR-LUSANNE, SWITZERLAND—The Kudelski Group is establishing a second headquarters in Phoenix, Ariz., to create a presence in its strongest market and to help buffer the effects of a strong local currency. Kudelski said the U.S. market has heated up while its Euro markets have cooled. The company also said it will be able to mitigate the effects of the strong Swiss franc by progressively shifting its center of gravity and by reporting its financial results in U.S. dollars as of its 2017 fiscal year.

Historically, the Group was able to generate a substantial proportion of its business from Switzerland and Europe due to its margin structure and the strong dynamics of the European markets. Since 2011, Kudelski said the situation has changed dramatically, and a number of challenges have emerged.

Today, the Group’s key growth opportunities are primarily outside of Europe, particularly in the United States. The outlook in Switzerland and Europe in respect of the Group’s core business and for new technology is less promising, as demonstrated for instance by the weaker dynamics of the European cybersecurity market compared to the United States. Moreover, the strength of the Swiss franc continues to affect the profitability of the Kudelski Group and more specifically, its capacity to invest over the long term, as the Group has less visibility of its future results due to the fact that the majority of the its revenues is generated in currencies other than the Swiss franc.

Although the Group’s worldwide headquarters will remain in Cheseaux, Switzerland, several high-level Group management and support functions will be relocated to Phoenix. Cheseaux will develop further as an excellence center in the field of security technologies. Additionally, the Group’s financial results will be reported in U.S. dollars as of its 2017 fiscal year, which is expected to better reflect its results from operations. While no impact on profitability is expected in 2016, these actions are expected to improve the Group’s cost structure over the longer term. The Kudelski Group will continue to be listed on the SIX Swiss Exchange.

By taking these measures, the Kudelski board of directors wishes to establish a strong foothold in the United States, providing the Group with better access to the world’s largest market while showcasing the high-quality innovation and engineering of its Swiss teams. A stronger presence in the United States will also enable the Group to recruit the appropriate profiles for the development of new business activities.

André Kudelski, chairman and CEO of the Group, said, “The Group continues to grow mainly outside of Europe. The timing is therefore appropriate to adapt our organization to the new market paradigm in order to ensure sustainability in a changing geographic and commercial environment.”

Establishing a second headquarters in the United States will also help expedite the commercial deployment of the Group’s innovation activities, such as its cybersecurity and intellectual property initiatives. At the same time, Cheseaux’s center of excellence for security technologies is expected to grow over the long term, helped by the Group’s expected overall reduction in exposure to the Swiss franc exchange rate. Positions linked directly or indirectly to security expertise will remain in Cheseaux. Phoenix was chosen as a complement to Cheseaux; the aim is not to clone the current HQ.

As a consequence of the transformation, a number of employees will be invited to move to Phoenix. Internal transfers between the two sites will be favored, in order to preserve the company’s unique DNA. Several Group support functions will be transferred to Phoenix as of this summer, in particular management positions within the Group finance and legal teams.