28th Jul 2016 12:03
LONDON (Alliance News) - Shares in pay-TV provider Sky PLC were among the biggest gainers in the FTSE 100 Thursday as it upped its dividend for its recently ended financial year and reported earnings ahead of market expectations.
Shares in Sky were up 3.4% at 917.50 pence Thursday afternoon.
The company reported adjusted earnings per share of 63.1 pence for the full year to end-June, ahead of consensus expectations of 62.4 pence, and up from 56.0 pence the year before.
Adjusted operating profit came in at GBP1.56 billion, up from GBP1.40 billion the year before, on revenue of GBP11.97 billion, up from GBP11.22 billion at constant currency.
Consensus forecasts provided by the company showed analysts expected Sky to report revenue of GBP11.79 billion.
Sky's adjusted results strip out exceptional one-off gains from the sale of stakes in ITV and the National Geographic Channel in the previous year, as well as costs related the purchase of remaining minority shareholdings in Sky Deutschland and the integration costs of Sky Deutschland and Sky Italia, amongst other costs.
On a reported basis, Sky's pretax profit fell to GBP752 million for the year to end-June from GBP1.52 billion the year before.
Sky revenue rose in each of its territories, seeing 7% growth in the UK and Ireland, 12% growth in Germany and 2% growth in Italy, reversing two years of declines in the country.
Within this, Sky said it had seen continued strong growth in its subscription revenue, up 6% in the year.
In the UK, Sky added 445,000 new customers in the year, including 93,000 in the fourth quarter. During the period Sky launched a number of products, including its improved Sky Q television set and its contract-free triple-play bundle for NOW TV with the on demand service, broadband and call packages.
In Germany and Austria, Sky added 346,000 customers, including 59,000 in the fourth quarter. In this region the company has been adding content and channels to its existing offer, and on Thursday announced the launch of its flagship entertainment channel Sky 1 in this German-speaking market.
In Italy. Sky added 17,000 customers, returning its customer base to growth for the first time in five years, Sky said.
Sky said it remains focused on improving its operating costs, and said it plans to deliver its "biggest year ever" in terms of cost cutting for the year ahead, with the aim of reducing operating costs as a percentage of sales by between 2% and 3%, or over GBP300 million on a run rate basis.
The company said it was on track to exceed its original run-rate synergy target of GBP200 million for its current year, and it now intends to further extend those savings, targeting GBP400 million in run rate synergies from the end of 2020.
Sky proposed a final dividend of 20.95 pence, taking its total dividend for the year to 33.5 pence, up from 32.80p the year before.
"Each of our markets is making very strong progress. In the UK and Ireland we passed £8 billion in revenue for the first time by giving consumers more and more reasons to choose Sky including our new premium service, Sky Q. In Germany and Austria, we have broadened our TV offering to attract more customers," said Chief Executive Jeremy Darroch in a statement.
"Our focus on operating efficiently and effectively in all our markets has enabled us to further reduce our costs as a percentage of sales, providing more fuel to grow profits and to invest where it counts - on screen and in our products and services.," Darroch added.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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