21st Apr 2016 08:23
LONDON (Alliance News) - Sky PLC on Thursday said operating profit rose 12% in the first nine months of its financial year, as revenue growth was driven by strong customer additions during the third quarter.
Shares in Sky were down 4.3% at 984.00 pence Thursday morning, the worst performer in the FTSE 100 index.
The pay-television provider said operating profit rose to GBP1.14 billion in the nine months to end-March, compared to GBP1.02 billion a year before, as revenue improved to GBP8.72 billion from GBP8.32 billion.
Sky attributed its revenue gain to strong growth in customer additions and a benefit from price rises in the UK last June, and it noted that it had achieved this growth despite the absence of Champions League rights in the UK and Italy. The company added 177,000 new customers in the third quarter, taking its total retail customers to 21.7 million.
In the UK and Ireland revenue rose to GBP6.16 billion from GBP5.82 billion, helped by customer additions as Sky focused on the launch of its new high-end service, Sky Q. It added 70,000 new retail customers and 438,000 new products in the quarter, including 46,000 new broadband additions.
Sky said it had been "really pleased" with the early response to its Sky Q entertainment hub since its launch in mid-February.
In Germany and Austria, revenue rose to GBP1.08 billion from GBP938 million, which Sky attributed to a strong customer response to its new Entertainment pack, which helped drive up average revenue per user. It added 73,000 customers in this market in the quarter and 199,000 new products, which counts multiple services taken by each customer.
Revenue in Italy declined to GBP1.48 billion from GBP1.51 billion despite the company adding 34,000 new retail customers and 49,000 new products, as it still lost customers, leading to a lower average number of customers, hit by the loss of Champions League football rights.
In terms of integrating its three businesses, Sky said it was on track to hit its run-rate synergies target as it exits its next financial year to June 2017.
Total costs for Sky were up 4% in the nine months, including a 5% rise in programming costs as Sky continued to invest in its content portfolio, it said. It benefited from losing costs related to the Champions League, although this was partly offset by higher costs related to Bundesliga football in Germany.
Aside from Sky Q, Sky said it had completed the roll out of its Sky Box Sets product with a launch in Italy during the quarter. It launched its new 'Sky Kids' application in the UK and Ireland, and it plans to roll this application out in Germany and Italy later in the year.
"It's been another strong quarter for Sky. Our strategy to broaden our business, expanding into new markets and customer segments, has delivered further excellent financial results with revenue up 5% and a double-digit growth in profit," said Chief Executive Jeremy Darroch in a statement.
"Our promise of world-class content, commitment to innovation, and brilliant service is persuading more customers to join and stay with Sky, in every market. As we pass the major milestone of 40 million products in UK and Irish households, we will continue to execute this successful approach across the group," Darroch added.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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