4th Feb 2015 08:17
LONDON (Alliance News) - Sky PLC Wednesday posted a big increase in pretax profit for the first half of its financial year, boosted by a rise in revenue and exceptional gains from the sale of its stakes in ITV PLC and the National Geographic Channel.
In its first results incorporating its acquisitions of Sky Italia Srl and a majority stake in Sky Deutschland AG, Sky posted a pretax profit of GBP1.21 billion for the half year to end-December, compared with GBP507 million a year before, as revenue rose to GBP4.30 billion from GBP3.67 billion.
Profit was boosted by a GBP492 million gain from the sale of its 6.4% stake in ITV PLC and a GBP296 million gain from the sale of its stake in the National Geographic Channel.
The company said that its deal to sell a controlling stake in its Sky Bet business is on track, and is scheduled to close in the third quarter.
On a constant currency basis and adjusted as if the acquisitions had been owned for six months, revenue rose to GBP5.60 billion from GBP5.34 billion a year before. Analysts had expected the company to post revenue of GBP5.59 billion, according to consensus provided by the company.
Sky proposed an interim dividend of 12.30 pence, up from 12.00 pence a year before.
Sky said that Italy contributed GBP286 million in revenue and an operating profit of GBP15 million, and Germany contributed revenue of GBP180 million and an operating loss of GBP19 million.
The company said that both Sky Italia and Sky Deutschland performed well during the period, with Germany seeing its highest ever customer growth, and Italy seeing good customer growth in a challenging economic environment. It said that the integration of the businesses is progressing well, and it is "excited about the potential for the three businesses to be even stronger together."
The company added 204,000 new retail customers in the UK in its second quarter, which it said is its highest growth in nine years. Analysts had expected customer growth of 124,000 in the UK. Within this, Sky posted 106,000 net broadband additions. Analysts had expected 99,000 broadband additions.
Rival BT Group PLC said last Friday that it had added 119,000 retail broadband customers during its third quarter, and 209,000 retail fibre customers, takings its customer base to over GBP2.7 million.
Sky Wednesday cited strong growth from its over-the-top service NOW TV. Although it did not detail what level of the customer additions came from this product it did say that it had seen a "record quarter of growth" due to partnerships with retailers including Dixons Carphone PLC and commercial partnerships with Google Inc and Vodafone Group PLC.
In Italy the company added 30,000 customers in its second quarter, with total paid-for products up 47,000. In Germany, the company added 214,000 retail customers in the second quarter, with total paid-for-products up 421,000.
Sky also saw a reduction in customer churn across all of its markets in its second quarter, down to 9.2% in the UK from 10.8%, to 8.3% in Germany compared with 11.4%, and down to 10% in Italy compared with 13.1%.
"Six months into the year, we've seen a good performance right across the new Sky. We have world-class capability within the expanded business and a strong set of plans that mean we are well placed to deliver growth and returns for shareholders," said Chief Executive Jeremy Darroch in a statement.
The company cited the launch of its new drama 'Fortitude', which it simultaneously launched in all five of its markets, as showing the potential it has for operating "at a greater scale."
Sky announced last Thursday that it has signed a multi-year deal with Telefónica UK Ltd for wholesale access to 2G, 3G, and 4G services over its 02 mobile network, with the aim of launching its first mobile services to customers in 2016.
The company is looking to sure up its "quad-play" offering, meaning it can offer TV, broadband, mobile and fixed line telephony. On a call with journalists Wednesday Chief Executive Jeremy Darroch said that around 40% of Sky's customers are now considered to be triple-play customers, meaning that they take up broadband, television and fixed line telephone with Sky.
Darroch opted not to speculate on the upcoming Premier League rights auction, which starts on Friday, but told journalists that Sky was "well prepared" for the auction.
The costs for the lucrative rights are speculated to be heavily inflated due to the increasing rivalry between Sky and BT. Sky has held a dominant position in Premier League rights historically, but has faced new competition from BT with the launch of its BT sport service. At the previous auction BT upped the ante, winning around 25% of the live Premier League rights, and it has also snapped up all live rights to the Champions League football from next season.
Shares in Sky are trading up 2.4% at 965.48 pence shortly after market open Wednesday morning, making it the best-performing stock on the FTSE 100 on the day.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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