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Eutelsat Communications: Third Quarter and Nine Month 2017-18 RevenuesRegulatory News: Eutelsat (News - Alert) Communications (Paris:ETL) (ISIN: FR0010221234 - Euronext Paris: ETL) today reported revenues for the Third Quarter and Nine Months ended 31 March 2018. Revenues for the three months to 31 March 2018
Rodolphe Belmer, Chief Executive Officer, commented: "In the third quarter, the overall revenue trend of our five operating verticals improved further at -1.1% after -1.8% at the half-year stage. Video continued to progress, notably with improving trends at our HOTBIRD video position, while in Government Services the outcome of the latest US Department of Defense renewals was positive once again, at above 95%. On the other hand, 'Other Revenues' are running behind expectations following the outturn of the Third Quarter. "We are working on a handful of active 'Other Revenues' opportunities in the pipeline which would enable us to land at the low end of our Full Year total revenues objective of -1 to -2%. However, in the event that none of these 'Other Revenues' materialize in the fourth quarter, the decline in revenues could be up to c. -3.5%. This has no impact on our other objectives for the current and following two years which are fully confirmed. "The year to date has seen significant headway on our strategic roadmap. In particular the procurement of KONNECT VHTS, represents a major milestone in our growth strategy in Connectivity and comes with major multi-year distribution commitments with Orange and Thales. Elsewhere, the disposal of our stake in Hispasat (News - Alert) will contribute to accelerating our deleveraging in line with our commitment to financial optimisation."
1 Evolution of Revenues at constant currency and perimeter,
excluding Other revenues. RECENT HIGHLIGHTS Since the start of 2018, Eutelsat has made further headway on its strategic roadmap with:
THIRD QUARTER REVENUES4 Third Quarter revenues stood at €337.4 million, down 3.3% year-on-year at constant currency and perimeter. On a reported basis, they were down 7.4% reflecting a negative currency effect of five points and a positive perimeter effect of one point (acquisition of Noorsat5). Excluding 'Other Revenues', the topline declined by 1.1% at constant currency and perimeter, reflecting an improvement in trend since end-December (-1.8%). Quarter-on-quarter, revenues were down by 1.8% on a like-for-like basis and by 2.9% on a reported basis and, the decline reflecting the evolution of 'Other Revenues'. Core businesses Video Applications (67% of revenues) Third Quarter revenues amounted to €225.0 million, down 0.2% year-on-year. Broadcast revenues are now stable, reflecting notably improving trends at HOTBIRD. Professional Video continued to decline due to ongoing pressure on contribution services. On a quarter-on-quarter basis, Video returned to slight growth (+0.2%) with Broadcast revenues up 0.5%, partly offset by lower Professional Video. At 31 March 2018, the total number of channels broadcast by Eutelsat satellites stood at 6,880, up 8.2% year-on-year. HD penetration rose once again, representing 19.7% of channels compared to 16.6% a year earlier, or 1,358 channels, up from 1,057 a year earlier (+28%). Government Services (11% of revenues) Third Quarter revenues stood at €38.0 million, down 2.3% year-on-year, reflecting the carry-over effect of previous renewals with the US Department of Defense. Quarter-on-quarter, revenues were down by 1.5%. The outturn of the latest round of contract renewals with the US Department of Defense (Spring 2018) was encouraging once again with a renewal rate of above 95% in value.
4 The share of each application as a percentage of total
revenues is calculated excluding "other revenues". Unless otherwise
stated, all growth indicators are at constant perimeter and currency. The fourth quarter will reflect the negative base effect of a positive one off recorded in the fourth quarter of last Fiscal Year. Beyond this, revenues will include the effect of these positive renewals as well as the ramp up of additional multi-transponder contracts at the 174° East position. Fixed Data (10% of revenues) Third Quarter revenues at €34.9 million, down 9.0% year-on-year. They continued to reflect ongoing pricing pressure in all geographies and the absence of significant incremental volumes at this stage. Quarter-on-quarter, revenues were down by 1.6%. Connectivity Fixed Broadband (7% of revenues) Third Quarter revenues stood at €21.5 million, down 7.7% year-on-year and by 0.7% Quarter-on-Quarter. This reflected lower revenues at European Broadband in a context of scarcity of available capacity in Western Europe, and slower than hoped-for progress by the retail joint-venture with ViaSat (News - Alert). In this context we are refocusing our efforts on the wholesale strategy. In addition, the recently completed management line-up of experienced professionals are working to optimize conditions for the arrival of significant incremental capacity in the next couple of years, starting with the Al-Yah-3 capacity for the African Broadband service in August 2018, to be followed by the KONNECT6, and KONNECT VHTS satellites in 2020 and 2021 respectively. Mobile Connectivity (5% of revenues) Third Quarter revenues stood at €17.9 million, up 17.9% year-on-year, reflecting the full-quarter effect of EUTELSAT 172B - with capacity pre-sold to Panasonic - which entered service at end-November 2017, as well as continued growth on wide-beam capacity notably over the Americas. Quarter-on-quarter, revenues were down 0.8%. Other Revenues Other Revenues amounted to €0.1 million in the Third Quarter, significantly lower than the €7.5 million recorded a year earlier and €5.4 million in the Second Quarter of 2017-18, and illustrating the lumpiness of this revenue line. Other Revenues in the pipeline are expected to materialize in the Fourth Quarter, although their level and timing cannot be ascertained at this stage. OPERATIONAL AND UTILIZED TRANSPONDERS The number of operational 36 MHz-equivalent transponders stood at 1,424 at 31 March 2018, up by 50 units compared with end-March 2017 reflecting mainly the entry into service of EUTELSAT 172B and the subsequent relocation of EUTELSAT 172A at 174° East. As a result, the fill rate stood at 66.8% at end-March 2018 versus 68.2% one year ago. Net, two incremental transponders were utilized during the Third Quarter, reflecting notably new business in Government Services at 174° East and incremental volumes utilized at HOTBIRD.
Note: Based on 36 MHz-equivalent transponders excluding high throughput capacity (KA-SAT satellite, Ka-band HTS payloads on EUTELSAT 3B, EUTELSAT 65 West A, EUTELSAT 36C and leased on Al-Yah 2, Ku-band HTS payload on EUTELSAT 172B).
6 Formerly called African Broadband Satellite. BACKLOG The order backlog9 stood at €4.6 billion at 31 March 2018 versus, €4.7 billion at end-December 2017, reflecting natural backlog consumption and in the absence of significant renewals during the Third Quarter. Year-on-year it reflects mainly the impact of the integration of Noorsat (-€0.4 billion).10 The backlog was equivalent to 3.1 times 2016-17 revenues. Video Applications represented 83% of the backlog.
NINE MONTH REVENUES Revenues for the first nine months of FY 2017-18 stood at €1,034 million, down 5.0% like-for-like. On a reported basis, they were down 7.6% reflecting mainly a negative currency as the perimeter effect is close to zero (the impact of the acquisition of Noorsat11 being broadly offset by the disposals of Wins/DHI/DSAT Cinema). Excluding 'Other Revenues', revenues were down 1.5% like-for-like. Nine months to 31 March 2018
OUTLOOK13 During the First Nine Months the revenue performance of the Group's operating verticals continued to improve, with a run-rate of -1% in the Third Quarter. On the other hand, 'Other Revenues', (non-recurring and not related to the commercialization of capacity and hence less predictable by nature), are running behind expectations following the outturn of the Third Quarter. We are working on a handful of active "Other Revenues" opportunities in the pipeline which would enable us to land at the low end of our Full Year total revenues objective of -1 to -2%. However, in the event that none of these "Other Revenues" materialize in the fourth quarter, the decline in revenues could be up to c. -3.5%.
9 The backlog represents future revenues from capacity lease
agreements and can include contracts for satellites under procurement. This has no impact on other objectives which are all confirmed for the current and next two years:
This outlook is based on the nominal deployment plan outlined hereunder. FLEET DEVELOPMENTS Nominal deployment programme
The Al Yah 3 satellite, on which Eutelsat is leasing capacity for its Konnect Africa project, was launched on 25 January 2018. The mission experienced some challenges during the launch stages resulting in a revised flight plan. Commercial service is expected to start in August 2018. Procurement of KONNECT VHTS Eutelsat ordered the KONNECT VHTS satellite from Thales Alenia Space. Expected to enter into service in 2021, it will bring 500 Gbps of Ka-Band capacity over Europe to support the development of European Fixed Broadband and in-flight Connectivity businesses. Significant firm multi-year distribution commitments have been signed with Orange (News - Alert) to address the Fixed Broadband market in European countries where the Group has a retail presence and Thales to serve notably the government market. Changes in the fleet
14 Including capital expenditure and payments under existing
export credit facilities and long-term lease agreements on third party
capacity. RECENT EVENTS Disposal of the stake in Hispasat On 18th April 2018, Eutelsat's 33.69% stake in the Spanish satellite operator Hispasat was sold for a consideration of 302 million euros. This operation is in line with the Group's strategy of rationalising its portfolio of assets in order to maximise cash generation. APPENDICES: QUARTERLY REVENUES BY APPLICATION Reported revenues The table below shows quarterly reported revenues. Q1 2016-17 revenues are restated under the new classifications used since H1 2016-17 results.
Proforma revenues The table below shows quarterly proforma revenues for FY 2016-17 excluding revenues from Wins / DHI and DSAT Cinema.
Third Quarter 2017-18 revenues conference call A conference call will be held on Monday, 14 May 2018 at 18.30 CET / 17.30 GMT / 12:30 EDT To connect to the call, please use the following numbers:
Access code: 6694686# Instant replay will be available from 14 May 2018 to 21 May 2018 on the following numbers:
Access code: 6694686# Financial calendar The financial calendar below is provided for information purposes only. It is subject to change and will be regularly updated.
Disclaimer The forward-looking statements included herein are for illustrative purposes only and are based on management's current views and assumptions. Such forward-looking statements involve known and unknown risks. For illustrative purposes only, such risks include but are not limited to: postponement of any ground or in-orbit investments and launches including but not limited to delays of future launches of satellites; impact of financial crisis on customers and suppliers; trends in Fixed Satellite Services markets; development of Digital Terrestrial Television and High Definition television; development of satellite broadband services; Eutelsat Communications' ability to develop and market Value-Added Services and meet market demand; the effects of competing technologies developed and expected intense competition generally in its main markets; profitability of its expansion strategy; partial or total loss of a satellite at launch or in-orbit; supply conditions of satellites and launch systems; satellite or third-party launch failures affecting launch schedules of future satellites; litigation; ability to establish and maintain strategic relationships in its major businesses; and the effect of future acquisitions and investments. Eutelsat Communications expressly disclaims any obligation or undertaking to update or revise any projections, forecasts or estimates contained in this presentation to reflect any change in events, conditions, assumptions or circumstances on which any such statements are based, unless so required by applicable law. View source version on businesswire.com: https://www.businesswire.com/news/home/20180514005981/en/ |