MTG holds steady

Modern Times Group delivered a fairly flat performance announcing Q4 net sales of SEK3.620 million (€427m) against SEK3.711 million in 2011 on constant exchange rates. Operating income was SEK 514 million (551m last time) when excluding associated company income and Q4 2011 non-recurring items.  For the year sales were SEK 13,336 million (against 13,473m in 2011) – up 1 per cent year on year. Operating income was SEK 1,695 million (1,933 in 2011) when excluding associated company income and Q4 2011 non-recurring items.

Cash flow from operations was up 12 per cent year on year to SEK 583 million and net debt reduced quarter on quarter to SEK 1 million from SEK 634 million in Q3 2012.

The Group continues to expect its Nordic pay-TV business to grow its revenues at constant exchange rates in 2013, and to report an operating margin of approximately 10-12 per cent for the full year 2013. The segment margin is expected to increase in 2014.

The Group also continues to expect the previously announced investments in its Emerging Market pay-TV operations to result in lower profitability levels in 2013 and expects rising profitability levels in 2014. However, when combining the Group’s decision to reduce its investments in its Ukrainian pre-paid satellite service, as the package and pricing structures are reviewed in the context of a highly competitive market environment, with higher ingoing mini-pay subscription balances at the beginning of the year, the segment is expected to achieve a breakeven EBIT result for the full year 2013. This compares with the Group’s previous expectations for the segment to report an operating (EBIT) loss of less than SEK 50 million for the full year 2013.

Jørgen Madsen Lindemann, President and Chief Executive Officer, commented: “The sales growth for our continuing operations in the fourth quarter primarily reflected the strong competitive positions of our emerging markets businesses, which took advertising market shares and grew their subscriber bases in almost all of our operating territories. This reflects the investments that we have made in our content offerings and the development of our channel brands.”

“As previously announced, we are now investing across a number of our businesses, and will do so throughout 2013, to ensure that our growth accelerates in the future. We have continued to innovate across our territories with new content, technologies, channels and services, and we are today offering our viewers, listeners and customers more high quality entertainment than ever before in more ways than ever before.”

“Scandinavian free-TV ratings improvements are more in focus than ever and we have now signed a number of strategically important channel distribution agreements, which will significantly boost the audience and advertising market shares for our free-TV channels in Denmark, enable us to launch a third free-TV channel in Norway and further boost the penetration of TV10 in Sweden. Our Viaplay Nordic online pay-TV service is performing well and growing rapidly, while our Nordic satellite platform and pay-TV channel offerings will benefit over time from the new content and channels that we are adding, as well as broader distribution and rising prices.”

“The Q4 results reflect both the investments that we are making and the measures that we are constantly taking to enhance our operating performance. We are on track with our development plan for the Nordic pay-TV business, while a combination of higher ingoing mini-pay subscription balances and lower investments in Ukraine is currently expected to result in an improved full year 2013 result for our emerging markets pay-TV business. We continue to anticipate improved profitability levels for our Nordic and emerging market pay-TV businesses in 2014.”

“Our asset light business model and strict working capital management have continued to generate high cash conversion levels, which have left us with almost zero net debt at the year end. This is why we are proposing to raise the annual ordinary dividend payment despite the investments that we are making. MTG is a growth company and we are focused on building the media house of the future by investing in growing businesses. We are therefore reviewing a wide range of organic investment projects, acquisition opportunities and potential co-operations in both our existing and new markets.”

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