SES: ‘Steady as she goes’

SES is still suffering the legacy hangover of last year’s German analogue business (which switched off in April) and which makes this current year’s revenues difficult to compare. Strip out last year’s analogue income and SES can justifiably claim revenue growth of an appealing 7.2 per cent. Leave the old analogue in, and the revenue growth slumps to 2.1 per cent.

The numbers, revealed by CEO Romain Bausch in the SES’ 1H presentation on July 26th, showed that operating profit was flat (€408.6 million, vs. last year’s €411.5 million), while profits fell from €298.7 million to €268 million. Just about the only wholly positive news was SES’ contracted backlog, up €300,000,000 to €7.1 billion.

Bausch explained that “SES is growing in all markets. Although the German analogue switch-off in April 2012 limits the comparison with the prior year period, the underlying growth has accelerated. We launched, and will shortly bring into service, SES-6, an important satellite supporting our future growth. An impressive list of recently signed agreements with DTH operators demonstrates the success of our growth strategy in emerging markets, with Oi in Brazil, Cignal Digital TV in the Philippines, Sky Vision in Indonesia, as well as Platco Digital and Wananchi in Africa all developing their businesses on SES satellites. Revenue from these regions increased by 9.3 per cent compared to H1 2012.”

He added that three new satellites are waiting to be launched, and unfortunately each of them is now launching later than planned. This will cost SES an estimated €18 million in this full year. Consequently, SES anticipated financial profits and guidance for the year is also suffering, and the financial markets might not care for this ‘jam tomorrow’ promise.

The new launch dates are:
•    Astra 2E Was June, now September on Proton
•    SES-8 Was June, now October on Falon-9
•    Astra 5B Was September, now December on Ariane

However, there was good news: “SES is now entering a period in which capital expenditure will reduce significantly, even while additional growth investments are pursued. This, coupled with rising revenue and EBITDA, will deliver strong growth in free cash flow, which may be applied to further investments and acquisitions and/or be returned to shareholders,” said Bausch.

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