SES announces full year 2019 results

SES S.A. has announced financial results for the year ended 31 December 2019 with results in line with SES’ financial outlook, including a second successive year of revenue growth in SES Networks. SES also announced the next phase of strategic transformation to position itself for future growth and deliver value to both customers and stakeholders that includes the potential separation of its Networks business within SES, a programme of innovation, greater operational and strategic focus and resource rationalisation and optimisation across the business. Finally, SES announced its support for the landmark decision taken by the U.S. Federal Communication Commission to enable 5G operations in a portion of the C-Band and deliver a win-win-win solution that has been the focus of all stakeholders since this process began almost three years ago. This decision will accelerate 5G leadership in the US, protect critical broadcast customers and neighbourhoods and deliver substantial value to SES’ shareholders.

Key Highlights

  • Group revenue of EUR 1,983.9 million down 1.3% as reported (-3.8% YOY at constant FX)
  • Group EBITDA of EUR 1,216.6 million down 3.1% as reported (-5.5% YOY at constant FX)
  • Net profit attributable to SES shareholders of EUR 296.2 million up 1.3% as reported
  • Net debt reduced by 5.8% (YOY) with net debt to EBITDA of 3.22 times in line with SES’ commitment to Investment Grade
  • Free cash flow before financing activities of EUR 826.3 million (2018: EUR 870.5 million) representing 41.7% of group revenue
  • A proposed dividend per A-share of EUR 0.40 in view of the short-term investment peak in 2021 and fully covered by 2019 earnings
  • 2020 financial outlook (revenue of EUR 1,920 – 2,000 million and EBITDA of EUR 1,150 – 1,210 million) reflects a more prudent view of revenue development in Video and a somewhat lower trajectory of growth exiting 2019 in Networks
  • Next phase of strategic transformation launched that includes consideration of the potential separation of Networks business within SES and EBITDA optimisation of EUR 40 – 50 million annually from 2021 onwards

Steve Collar, CEO, commented: “We are satisfied with our 2019 financial results with EBITDA, net debt to EBITDA and CapEx metrics all in line with the outlook provided last February. Revenue was slightly below our expectations as we missed one important contract on the Video side but continued strong focus on discretionary spending ensured that we met our important EBITDA targets.

With growth of 4.5%, and more than 20% in the last two years, SES Networks continues to expand on the back of strong growth in the Aeronautical, Cruise and Government segments while, in Fixed Data, we signed and deployed several important connectivity networks that will contribute to future growth in 2020 and beyond.

With O3b mPOWER a little over one year away from first launch, we have made great progress in building our seamless, cloud-enabled, automated, multi-orbit global network partnering with Microsoft, Amdocs and Kythera. Pleasingly, we signed our first three O3b mPOWER customers with Carnival Corporation’s Global Experience and Innovation team extending multi-orbit operations to all Princess Cruise Line vessels, as well as agreements with Orange in Africa and a second telco to leverage the unique backhaul capabilities of O3b mPOWER.

Our Video business continues to respond to the ongoing evolution in media consumption with DTH and cable customers ‘right-sizing’ capacity leading to a decline of 7.8% in underlying revenue. Despite this, our technical reach grew to over 365 million households in 2019 and we now carry 3,000 HD and UHD TV channels to audiences around the world. Our updated FY 2020 outlook incorporates a more prudent view of revenue development in Video and a somewhat lower trajectory of growth exiting 2019 in our Networks segments.

The proposed dividend of EUR 0.40 underscores our continued commitment to maintaining SES’ Investment Grade credit rating, providing an attractive return to shareholders while supporting the short-term investment peak in our fast-growing, highly differentiated Networks business. We believe that we have established a unique and non-replicable value proposition within our Networks business with verticals such as Aeronautical, Cruise and Government offering strong growth opportunities that demand focus and scale. Accordingly, we are undertaking a programme of transformation that includes the consideration to separate our Networks business within SES and potentially provide it with access to external capital.

Finally, we are delighted to express our support for the plan that FCC Chairman Ajit Pai announced last Friday to repurpose a portion of the C-Band for 5G operations in the United States. This is a win-win-win outcome that we have worked tirelessly towards for almost three years. Our focus now is in working diligently with our customers to protect and enhance our services to the nearly 120 million households that rely on our satellites for distribution through the largest and most complex spectrum repurposing effort ever undertaken. The resulting accelerated relocation payments will be used to enhance value through pragmatic deleveraging, targeted investments focused on our fast-growing Networks business and return to our shareholders.”

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