Bloomberg News

SES Falls as German TV Switch-Off to Weigh on 2012: Paris Mover

February 17, 2012

Feb. 17 (Bloomberg) -- SES SA, the world’s largest publicly traded satellite operator, dropped the most in almost seven months in Paris trading as Germany’s analog satellite television switch-off will weigh on 2012 earnings growth.

The stock fell as much as 5.5 percent to 17.56 euros. That’s the steepest intraday decline since July 23. It traded 5 percent lower at 10:45 a.m. in Paris, giving the company a market value of about 7 billion euros ($9.2 billion).

Recurring revenue and earnings before interest, tax, depreciation and amortization, which exclude currency movements and one-time items, will rise by about 2 percent and 1 percent respectively this year, the Luxembourg-based company forecast today. Excluding the analogue impact, revenue and Ebitda on that basis are both predicted to rise by about 9 percent this year.

“The German switch-off is impacting our guidance,” Chief Executive Officer Romain Bausch said in an interview. “The underlying growth trends excluding this one-off impact are strong and sustainable.”

The CEO predicted the German switch-off will cut revenue by about 73 million euros this year.

Satellite Delays

Recent delays in satellite launches and solar-array circuit failures are also affecting the 2012 revenue and Ebitda growth rates. SES forecast annual average revenue growth of about 4.5 percent and Ebitda of 4 percent on a recurring basis for 2012 to 2014. Excluding the switch-off impact, the annual average growth rate for sales and Ebitda is of about 7.5 percent.

The three-year guidance “implies a 2012 below expectations,” said Saverio Papagno, an analyst at AZ Fund Management in Luxembourg. “This is due to the German switch-off and some technical problems with a couple of satellites. That’s why the market is nervous on them today.”

The 2012 guidance is “disappointing,” according to Oddo, a Paris-based brokerage.

SES said 2011 net income rose 27 percent to 617.7 million euros because of lower financing charges and taxes. Revenue was little changed at 1.73 billion euros. Analysts expected profit of 557.2 million euros and revenue of 1.74 billion euros, according to the averages of estimates compiled by Bloomberg.

SES, which is launching satellites to add capacity as demand from clients increases, said its contract backlog was 7 billion euros at the end of 2011, “substantially replenished” by about 2 billion euros of renewals and new business signed in the year. The company is proposing a dividend of 88 cents per share from 80 cents a share a year earlier.

SES may sell bonds in the U.S. later this year to diversify its funding, Chief Financial Officer Andrew Browne said in an interview.

--With assistance from Beth Mellor in London and Francesca Cinelli in Milan. Editors: Thomas Mulier, David Risser

To contact the reporter on this story: Chiara Remondini in Milan at cremondini@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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