Eutelsat Covid-19 trading warning
April 10, 2020
By Chris Forrester
Eutelsat has downgraded its trading guidance for the rest of this year and its next financial year (starting July 1st). The news followed a Board Meeting on April 9th and was largely blamed on the Coronavirus. The satellite operator is also trimming its annual dividend by 30 per cent even though it isn’t due to be paid until November.
Intelsat also cancelled its guidance and delayed its quarterly report from May to June.
Eutelsat stated that unlike many businesses its core activities are “highly resilient”, especially in its Video division which contributes more than 60 per cent of revenues. But the statement said its Occasional Use revenues (around 1 per cent of revenues) is being badly affected because of the cancellation of sports events. Another segment suffering is its Mobile Connectivity because of the lack of travelers on airlines.
It also emerged that its Quantum satellite expected to launch in Q3 of calendar 2020 will likely be delayed. And its Eutelsat Konnect craft will see delayed installations of its ground-based gateways.
“Revenues at the end of February were in line with our expectations; however, these effects will be progressively felt in the Third and Fourth quarters of the current Financial Year (2019-20), and are likely to be reflected at least into the early months of FY 2020-21, together with a more generalised slowdown in the pace of new business,” said Eutelsat’s statement.
“In the light of the impact in the Third and Fourth Quarters, we estimate the risk to FY 2019-20 revenues resulting from the Covid-19 crisis is of the order of €20 million. In consequence we now expect revenues from the five operating verticals of around €1,250 million, compared with our previous expectation of revenues in the lower end of a range of €1,270 to €1,315 million. This limited impact highlights the resilience of our overall activities,” says the statement.
“We continue to assess the effect of the crisis on the outer years. While this is ongoing, we are temporarily suspending our objective of Discretionary Free-Cash flow of circa €500 million in Fiscal year 2021-22, although we are confident our business will remain highly cash generative. An updated objective will be provided by the end of July,” said Eutelsat.