Third Quarter revenues of 383 million, up 4.2% reported and 1.1% at constant currencyNine month revenues of 1,157 million, up 6.1% reported and 1.3% at constant currency
Order backlog of 5.9 billion, representing four years of revenues
Current and next year objectives adjusted to reflect tougher industry conditions
Adapting strategy to lower growth environment
Paris, 12 May 2016 - Eutelsat Communications (ISIN: FR0010221234 - Euronext Paris: ETL) today reported revenues for the third quarter and the nine months ended 31 March 2016.
Key data: three months to 31 March 2016
In millions Q3 2014-15 Q3 2015-16 Actual change Change at constant currency
Video Applications 225.3 239.1 6.1% 4.9%
Data Services 58.1 54.4 -6.3% -12.6%
Value-Added Services 23.4 25.3 8.0% 7.7%
Government Services 49.5 49.7 0.5% -7.4%
Other revenues 11.4 14.5 27.0% 25.5%
Sub-total 367.7 383.0 4.2% 1.1%
Non-recurring revenues - - - -
Total 367.7 383.0 4.2% 1.1%
EUR/USD exchange rate 1.197 1.095 - -
Revenue growth in the Third Quarter was below expectations, reflecting a worse than expected environment in several emerging markets, in particular in Latin America, where much of our new capacity is targeted and the spread of tough competitive conditions in Data Services to all markets. As a result, we now expect Full Year Revenues 2015-16 to be broadly flat (versus bottom-end of the 2-3% range previously). These headwinds will continue to impact Full Year 2016-17 revenues. In consequence, revenues are now expected in the region of -3% to -1% (versus the previous 4-6% range).Eutelsat is adapting to slowing industry-wide momentum, undertaking a wide-ranging review of its organization and priorities with an emphasis on cash-flow generation and margin support. A detailed update will be provided in July.
Rodolphe Belmer, Chief Executive Officer commented: Our business is strong and highly resilient. We are adjusting our strategy in the face of slowing industry-wide growth and we are committed to maximizing cash and protecting our profitability during this cycle. Our industry continues to offer long-term growth levers and we are confident we can position ourselves to capture these opportunities and generate value for our stakeholders.
OPERATING HIGHLIGHTS
The Third Quarter saw further progress on the deployment plan with:
The entry into service of EUTELSAT 36C, bringing incremental resources over Russia and Sub-Saharan Africa, including a significant lease to Multichoice;
The launch and entry into service of EUTELSAT 9B, mainly bringing replacement capacity over Europe;
The launch of EUTELSAT 65 West A, bringing incremental capacity over Latin America. EUTELSAT 65 West A started operations on 1 May 2016; the HTS payload is fully leased to Echostar and Stargroup.
Elsewhere,
Eutelsat procured an all-electric satellite from Space Systems Loral in March to expand broadcasting in Africa, the Middle East and Turkey. To be launched in third quarter 2018, it will operate at the 7 East orbital position as EUTELSAT 7C;
Eutelsat procured ground network infrastructure for Russian and African broadband projects respectively from Gilat Technology and Hughes Network Systems.
THIRD QUARTER REVENUE ANALYSIS BY APPLICATION[1]
Total revenues for the Third Quarter ending 31 March 2016 stood at 383.0 million, up 1.1% at constant currency and by 4.2% in actual terms, the appreciation of the dollar relative to the euro adding some three points to top-line growth.
VIDEO APPLICATIONS (65% of revenues)
Third Quarter revenues for Video Applications amounted to 239.1 million, up 4.9% at constant currency. This rise mainly reflected the entry into service of EUTELSAT 8 West B in October 2015 and EUTELSAT 36C mid-February 2016, as well as higher revenues at Fransat on the back of the transition to High Definition in France, which is now nearing completion. These elements more than offset lower revenues at the HOT BIRD position following the non-renewal of several contracts with service providers in recent months, as well as a decline in revenues from Professional Video.
At 31 March 2016, the total number of channels broadcast by Eutelsat satellites stood at 6,156, up 7.1% year-on-year. HD penetration continued to rise, representing 13.1% of channels compared to 11.7% a year earlier, or 807 channels, up from 672 a year earlier.
DATA SERVICES (15% of revenues)
Third Quarter revenues for Data Services stood at 54.4 million, down 12.6% year-on-year at constant currency and by circa 8% excluding the impact of reclassifications to Government Services. This reflected on one hand the ramp-up of capacity on EUTELSAT 115 West B (serving the Americas) which started operations in October 2015, and on the other, headwinds including the termination of the contract for Ka-band capacity on EUTELSAT 3B in December, and a decline in revenues at 53 East following the rationalisation of capacity at this position in May 2015.
In recent weeks, trends until now impacting the EMEA region, notably pricing pressure, have begun to manifest themselves in other geographies.
VALUE-ADDED SERVICES (7% of revenues)
Third Quarter revenues for Value-Added Services amounted to 25.3 million, up 7.7% year-on-year at constant currency.
185,000 terminals were activated on KA-SAT at 31 March 2016, compared with 190,000 at end December 2015 and 180,000 a year earlier, reflecting high loading of beams in markets such as France and the UK which were previously strong contributors to growth.
The quarter-on-quarter decrease in subscribers reflected notably a rationalization of their customer base by certain distributors. However ARPU trends are well-oriented notably thanks to proactive yield management underpinning revenues.
As in the Second Quarter, maritime services continued to reflect low season
