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Broadcaster CME swings to profit on Czech turnaround
March 12, 2015 / 8:27 AM / 3 years ago

Broadcaster CME swings to profit on Czech turnaround

PRAGUE (Reuters) - Czech broadcaster Central European Media Enterprises (CME) topped its full-year profit guidance after swinging to a fourth-quarter core profit, boosted by a Czech market turnaround that looks set to slow.

Fourth-quarter operating income before depreciation and amortization (OIBDA) rose to $55.1 million, beating the average estimate of $53.8 million in a Reuters poll.

The full-year figure reached $95.4 million, reversing a loss in 2013 and was just ahead of the company’s guidance of $85 million to $95 million.

Shares climbed more than 5 percent in early trading in Prague before closing up 0.8 percent at 67 crowns. CME’s Nasdaq-listed shares traded up 1.1 percent at 12.14 p.m. EDT.

The central European broadcaster, whose main shareholder is Time Warner, has new management and has won back customers it lost under an aborted strategy of aggressive price rises in the midst of a TV advertising slump.

The Czech market is the biggest profit driver of CME’s six central and eastern European markets and it led the rebound last year, accounting for almost two-thirds of 2014 OIBDA.

Revenue in the country alone was up 15.9 percent last year. Group revenue climbed 7.5 percent in 2014 to $680.8 million.

CME said it expected Czech television advertising revenue to rise again in 2015 but not as strongly as last year.

“The major increase in the improvement in the Czech Republic, bringing up our market share from 49 percent to 60 percent, has been done,” co-Chief Executive Christoph Mainusch said on an analyst call.

CME said it would give guidance on 2015 after the first quarter is finished but repeated its past outlook of delivering positive free cash flow in 2015. It ended 2014 with negative free cash flow of $94 million.

The company completed a series of financing deals involving its main shareholder last year to cut debt costs. Co-CEO Michael Del Nin said the transactions would reduce CME’s cash interest burden in 2015 by up to $57 million compared to 2014.

“When negotiating these transactions we placed a premium on flexibility and believe that a continuing improvement in our operating performance will provide a catalyst to further address the cost of our debt in the future,” Del Nin said.

Reporting by Jason Hovet and Robert Muller; editing by Jason Neely and Vincent Baby

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