SES lowers full-year guidance

SES has made a downward adjustment to its guidance for recurring revenue growth in 2010 from 5% to a target range of 4-5%.
The company has done so in reaction to the delayed launch of its ASTRA 3B satellite and a technical difficulty on the AMC-16…

SES has made a downward adjustment to its guidance for recurring revenue growth in 2010 from 5% to a target range of 4-5%.

The company has done so in reaction to the delayed launch of its ASTRA 3B satellite and a technical difficulty on the AMC-16 satellite that necessitated the shutdown of some transponders on that spacecraft.

The problem with AMC-16 was related to a series of solar array circuit failures that occurred to the Lockheed Martin A2100 spacecraft during a recent eclipse. SES shut down a small number of transponders to conserve power on AMC-16. This will cause an annualised revenue reduction of US$10m.

At the Q1 results conference call, SES CEO Romain Bausch said that the delay to Astra 3B, which was originally scheduled to launch on an Ariane 5 rocket on March 26, was likely to result in a revenue loss of US$2-3m.

According to Bausch, Arianespace is now targeting a launch date in the second half of May. One of the driving factors of the revenue loss incurred by this delay is that Astra 3B will now be unable to take advantage of the increased demand for occasional use services that will exist during the FIFA World Cup, which begins June 12.

SES CFO Andrew Browne said that the guidance adjustment is limited to 2010 due to these two events, and that the company’s mid-term guidance for recurring revenue of 5% from 2010 to 2012 remains unchanged, as does the corresponding equivalent for recurring EBITDA.

Overall Q1 results saw a check to SES’ long period of reported growth. Reported revenue was E423.4m, compared to E423.9m in Q1 2009, while reported EBITDA of E307.6m was also slightly lower than E308.9m generated during the equivalent period last year.

Recurring revenue rose 2.4% to E422m, while recurring EBITDA climbed 2.2% to E311m.

Bausch said: “Results are in line with expectations and provide a stable base for the year going forward.”

Net financing charges for the quarter were E63.7m, an increase of E22.5m over the E41.2m charges incurred in Q1 2009. E14.4m of this increase was due to the revaluation of intercompany balances and currency holdings. These are set off by equal and opposite accretions to SES’ currency exchange reserve and have no impact on cash or shareholders’ equity.