Eutelsat preserves margin but posts challenging first half-year | Major Businesses | Business
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It may have described its financial performance in the first of its current fiscal year as ‘solid’, with profitability remaining ‘robust’, but satellite operator Eutelsat has reported a challenging H1 in term of revenues and profits, including video applications.
eutelsat 10August2018
For the six months ended 31 December 2018, Eutelsat posted revenues of €658.1 million, down 4.4% compared with the same time in 2017. Overall operating verticals’ revenues was €660.4 million, a yearly fall of 2.3%, of which video applications accounted for €432.1 million, down 2.5% on an annual basis. These contributed to H1 EBITDA of €546.2 million, slipping 5.1% on an annual basis.

The first half results showed that the video applications business line now accounts for two-thirds of all revenues. Eutelsat said that the year-on-year fall reflected lower professional video revenues in a context of continued price pressure as well as the impact of a lower contribution from Fransat. excluding these two factors it said that pure broadcast revenues were broadly stable. Second quarter revenues stood at €215 million, down by 2.4% year-on-year but broadly stable on a quarter-on-quarter basis.

At 31 December 2018, the total number of channels broadcast by Eutelsat satellites stood at 7,067, up 3.8% year-on-year. HD penetration continued to increase, standing at 1,500 channels up 17.6% compared with a year earlier. This implied a penetration rate of 21.2% compared with 18.7% a year earlier.

The company noted that its revenue profile reflected an anticipated back-end loading in the second half of its finance and gearing was further reduced. It also said that during the six months it has continued to build the foundations for its return to growth. Indeed Eutelsat revealed that it had sealed the first deals for the CIRRUS, hybrid satellite-OTT turnkey delivery solution as well as closing regular capacity contracts.

“We continued to leverage all components of cash generation,” said Eutelsat chief executive Rodolphe Belmer commenting on the first half results. “With the LEAP cost-savings plan on track, the effective application of design-to-cost to the HOTBIRD replacement, the successful €800 million bond issue in October and the disposal of our stake in EUTELSAT 25B...we continue to target a broadly stable top-line for our operating verticals for the year as a whole, and we are confident in our ability to deliver strongly on our profitability, discretionary free cash flow and de-leveraging targets.”

Going forward, Eutelsat was  bullish about the video business in general which it said was set to improve in the coming quarters. The company noted contracts signed with the Ethiopian Broadcasting Corporation and the Association of Ethiopian Broadcasters for capacity on EUTELSAT 8 West B, representing multi-transponder capacity including incremental resources plus a new multi-year, multi-transponder contract with Afghanistan Broadcasting System for capacity on the EUTELSAT 53A satellite. Eutelsat will also now sell capacity directly to beIN Media, reflecting the direct approach implemented in the MENA region.