February 6, 2019 / 3:53 PM / 5 months ago

UPDATE 1-Broadcaster CME sees profit rising more, quiet for now on dividend chances

(Updates with conference call comments, outlook)

PRAGUE, Feb 6 (Reuters) - Broadcaster Central European Media Enterprises (CME) forecast on Wednesday further core profit growth in 2019 but said it would wait to see how the year developed before detailing potential plans to reward shareholders.

CME, which is active in the Czech Republic, Romania and three other central European markets, has seen profits rise in recent years and has cut a debt pile that once topped $1 billion.

That has prompted analysts and investors to ask whether it could soon pay dividends or announce share buybacks.

Co-Chief Executive Michael Del Nin said the group would wait until near the end of the year before detailing any plans for potential capital allocation alternatives beyond deleveraging.

“We would be better served if we see how the year goes on,” Del Nin told an earnings call. “When we are closer to year-end, I think with more information at hand, we will be able to come out with something a little bit more definitive.”

CME posted operating income before depreciation and amortisation (OIBDA) up 23 percent in constant rates to $90.7 million in the fourth quarter, beating the average estimate of $85 million in a Reuters poll.

For the full year, OIBDA reached $222.7 million and cash flow generation grew 30 percent. CME forecast OIBDA would grow by 10 to 12 percent at constant rates in 2019, slower than last year but indicating a rise to above $240 million.

CME said it repaid $312 million in debt and related payables in 2018, lowering its net leverage ratio to 3.5 times. It expects the ratio to fall to about three times this quarter, even after scrapping the planned sale of its Slovenian arm last month.

The falling leverage ratio helps cut CME’s borrowing costs, as agreed in financing deals with its majority shareholder AT&T, which became the main owner after acquiring Time Warner.

CME’s next major debt maturity comes due in 2021. CME’s debt service obligations have fallen to $27 million a year.

This combined with growing free cash flow generation could offer opportunities for other ways to allocate capital, it said.

“We should have more than enough financial resources to retire that debt before it comes due while still being able to evaluate alternatives to capital allocation to further improve shareholder returns,” Del Nin said on the analysts’ call.

Dual-listed CME shares rose 2.4 percent on the U.S. Nasdaq on Wednesday and traded at a near two-week high in Prague.

Reporting by Jason Hovet and Robert Muller Editing by Edmund Blair

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