9th Mar 2018 08:10
LONDON (Alliance News) - Satellite company Inmarsat cut its dividend on Friday due to a "lack of visibility" over future cash payments from its Ligado Networks contract, as it said 2017 earnings dropped year-on-year despite a rise in revenue.
Shares were down 3.0% at 449.90 pence at the London open on Friday.
Inmarsat is to pay a final dividend for 2017 of 12 US cents per share, which it said is in line with a new annual payout rate of 20 cents, taking the total for 2017 to 33.62 cents, having paid a total dividend of 53.96 cents in 2016.
Inmarsat said the annual dividend will remain at this reduced level of 20 cents until cash flow recovers. Free cash flow for 2017 fell to USD41.2 million from USD274.5 million in 2016.
The company's pretax profit fell to USD229.8 million from USD299.2 million in 2016, while adjusted earnings before interest, tax, depreciation, and amortisation decreased 5.5% to USD751.4 million. On a statutory basis, Ebitda was down 8% to USD731.5 million.
Group revenue increased, however, 5.4% to USD1.40 billion. The Maritime division's revenue dipped 1.8%, Government revenue rose 11%, Aviation by 37%, though Enterprise was down 8.3%.
Fourth quarter revenue was down 1.2% year-on-year to USD353.7 million, with adjusted Ebitda down 17% to USD183.6 million and on a statutory basis this fell 26% to USD163.7 million.
Payments from the Ligado contract will pause in 2019 then resume the year after at around USD136.0 million a year, growing 3% at a compound rate over the next 99 years. Inmarsat said the contract has weathered Ligado bankruptcy once already, and it said the contract has upside value despite the difficulties.
Inmarsat is nonetheless confident on the medium to long-term growth outlook for the company, and said it is strongly positioned in its chosen markets.
It is targeting mid-single digit percentage revenue growth excluding Ligado over the next five years, and it expects Ebitda and free cash flow to excluding Ligado to improve "steadily".
For 2018, revenue is guided between USD1.30 billion and USD1.50 billion, and capital expenditure from 2018 to 2020 is guided for a range of USD500.0 million to USD600.0 million.
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