SES H1: Growing backlog, improving trends
July 28, 2017
By Chris Forrester
Luxembourg-based satellite operator SES has reported its half-year (to June 30th) financials, saying that revenues were up 9.6 per cent to €1.049 billion, and it had achieved an EBITDA margin of 65.5 per cent (66.4 per cent last year) and operating profit margin of 29.2 per cent (31.3 per cent last year). Its all-important contracted backlog rose from €7.3 billion to €7.5 billion.
Generally, however, it was a report of ‘steady as it goes’, given that SES says it is enjoying an improving trend in its Video division but with Q2 revenues falling 1.9 percent (Q1/2017 fall was down 4.2 per cent).
Karim Michel Sabbagh, President and CEO, commented: “SES continues to make a positive start to 2017 and is well positioned to generate sustained growth and improving returns. SES Video continues to deliver differentiated services and enhance the viewing experience, with the proportion of integrated solutions nearly doubling versus last year. The improving trend in Q2 2017 underpins our stable outlook for 2017 before the temporary impact of changes due to launch schedule and satellite health, which are expected to result in a slight decline.”
“SES Networks’ distributed network capabilities are driving strong growth across our data-centric verticals, expanding with global fixed data, aeronautical, maritime and government clients. The development agreement, signed today, with Boeing is the latest milestone in delivering next generation technology that will form the basis for SES’s future network and will expand the future addressable market.”
At 30 June 2017, SES’s global fleet carried a total of 7,741 TV channels, representing a year-on-year increase of 4 per cent. SES’s HDTV channel count grew by 6 per cent, year-on-year, to 2,587 channels, while the SES satellite network now also carries 20 commercial UHD channels (30 June 2016: 16), including regional variations. Consequently, HD penetration increased from 32.7 per cent to 33.4 percent in the last 12 months. Over the same period, the proportion of total channels broadcast in MPEG-4 increased from 58.9 per cent to 63.5 per cent of SES’s total TV channels.
SES’s Networks division saw revenues grow 24.9 per cent to €343.4 million (up 7.5 per cent like for like).
SES’s Mobility division also saw a strong half-year, with revenue growth up 88.1 per cent to €83.8 million (up 37.1 per cent like for like).
Sabbagh reported that SES Video growth for FY 20171 is expected to be stable, in line with the previous outlook, before the combined impact of the later launches and changes in satellite health. Including the temporary impact of these changes, SES Video is expected to decline slightly in FY 2017, returning to growth thereafter.
The previous targets for the three SES Networks verticals are all re-affirmed. For FY 2017, SES is targeting a return to growth in Fixed Data, strong growth in Mobility and stable-to-slight growth in Government.
SES’s future revenue trajectory will benefit from the contribution of recently added and forthcoming GEO-MEO investments, planned to be launched by the end of 2019, which are expected to generate incremental annualised revenue of up to €750 million (equivalent to around 35 per cent of 2016 group revenue) at ‘steady-state’. Over 30 per cent of this revenue is already contracted.