February 16, 2018 / 10:23 AM / 2 years ago

Eutelsat's upbeat view sends shares up more than 10 percent

(Reuters) - French satellite operator Eutelsat (ETL.PA) remains confident of reaching its full-year objectives despite posting a 7.4 percent drop in first-half core profit (EBITDA), saying on Friday its cost-cutting programme is ahead of plan.

Its underperforming shares jumped more than 10 percent.

Eutelsat’s Leap cost-savings plan, launched in the first half of 2016-2017 and aiming to make 30 million euros (26.95 million pounds) in annualised savings by 2018-19, is ahead of track, helping achieve a 0.5 point rise in EBITDA margin at constant currency rates, the company said.

The satellite service sector is facing structural challenges over the role of satellite delivery, relative to streaming media offering customers content over the Internet.

Eutelsat’s half-year EBITDA was weighed down by slowing demand in its core video transmission business, which still contributed 66 percent of total revenue in the first half, though this proportion is declining.

However, Eutelsat expects to see low-single digit growth in the video division by the end of 2017-2018, backed by broadcast and professional video, said Chief Executive Rodolphe Belmer on a call with investors.

The company, which reported EBITDA of 544.6 million euros ($683 million) on revenue of 696.6 million, confirmed its outlook for a core profit margin of more than 76 percent for fiscal year 2017/2018.

The company’s shares, which had plummeted earlier this week to their lowest level in a year, were up 10.5 percent at 18.74 euros by 0859 GMT.

Reporting by Anita Kobylinska; Editing by Biju Dwarakanath and David Holmes

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