February 8, 2018 / 7:59 AM / 2 years ago

CORRECTED-Broadcaster CME's core profit rises, aims to cut debt in 2018

(Corrects first paragraph to say core profit, not net)

PRAGUE, Feb 8 (Reuters) - Broadcaster Central European Media Enterprises (CME) reported a 26.5 percent rise in fourth-quarter core profit on Thursday and said it aimed to pay down a large chunk of its debt in 2018 to lower borrowing costs.

Boosted by rising television advertising revenue and stronger local currencies in its central and eastern European markets, CME has seen earnings rise, helping cut costs on a debt pile that stood at $1 billion at the end of October.

In the fourth quarter, operating income before depreciation and amortisation (OIBDA) rose to $67.6 million, just above the average estimate in a Reuters poll. Revenue climbed 15 percent in the quarter to $196.1 million.

The figures strip out contributions from CME’s operations in Croatia and Slovenia which are slated for sale. CME should update investors on the sale in a conference call on Thursday after running into regulatory hurdles in Croatia last year.

The fourth-quarter result put full-year core profit at $165.5 million, the top range of the company’s outlook. It was a fourth straight year CME, whose main shareholder is U.S. media group Time Warner, posted growth above 20 percent.

“We anticipate that revenue growth, combined with our ongoing focus on cost containment, will drive another year of robust growth in profitability and continued margin expansion in 2018,” Co-Chief Executive Michael Del Nin said.

“Together with lower debt and reduced borrowing costs, this sets us up for a process of accelerated deleveraging that we think will characterize the year ahead.”

CME said it would use its cash generation, proceeds from the sale of operations in Slovenia and Croatia, expected proceeds from debt warrant exercises and lower debt costs to pay a “significant” part of debt, cutting its net leverage ratio to around three times and average borrowing cost to 4.5 percent.

Reporting by Jason Hovet; Editing by Edmund Blair

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