Inmarsat reaps IFE benefits

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London-based satellite operator Inmarsat is beginning to reap the rewards from air travellers and their wish to stay connected while in the air.

As reported on March 7th, last year’s revenue increased by 5.3 per cent to $1.46 billion in 2018, however, profit after tax was down 32.3 per cent to $125 million. Earnings were up 4.2 per cent, from £739.3 million to £770.1 million in 2018 after increasing 14.6 per cent in the fourth quarter of last year. Overall, the revenue picture was 1 per cent ahead of expectations.

Traditionally Inmarsat served the maritime sector (which is suffering in terms of revenues), but its Aviation revenues were up 40 per cent to £256.1 million from £181.8 million driven by the company’s global GX broadband offering. Within the company’s aviation sector in-flight connectivity revenues more than doubled to $101.3 million.

Inmarsat now has about 1580 aircraft under contract with another 450 in the pipeline. The company says its core Aviation business continued to deliver high margin double-digit revenue growth, up c.17 per cent YoY.

“Management reiterated its mid-single digit top line growth outlook for 2018-2022 and provided a range of 2019 revenues between $1300 million and $1400 million. Current consensus forecasts stand at $1374 million in line. Inmarsat also provided a new capex guidance for 2021 of $450-550 million. This is lower than the 2019-2020 range of $500-600 million but above our own $369 million forecasts,” said investment bank Exane/BNPP in a note to clients.

Berenberg praised Inmarsat’s Aviation division, saying it was showing positive trends: “While installation revenues means that top-line performance is strong, the light at the end of the tunnel for Inmarsat’s aviation business is high-margin airtime revenues. It was therefore comforting to see these revenues starting to affect the business in Q4; they were the key reason for the 10 percent beat. Once again, however, strong equipment sales in January will result in a higher level of equipment revenues in Q1 so it will be at the Q2 and Q3 stage where a more normalised trend could be restored.” 


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