Analysts Call Scaled-Back SES, Eutelsat 2011 Projections 'Conservative'

[Satellite TODAY Insider 02-21-11] SES CEO Romain Bausch lauded his company’s 2010 performance as "very strong" in a Feb. 18 conference call.
    SES’ 2010 revenues were 1.73 billion euros ($2.35 billion), an increase of more than 7 percent compared to 209, and the satellite operator generated profits of more than 487 million euros ($664 million) in 2010. The company now has a fleet of 1,249 transponders with a utilization rate of about 79 percent, a slight decrease compared to its 2009 rates.
    SES brings its 75 percent of its revenues from Europe and North America and 25 percent from emerging markets. Bausch said the operator would maintain focus on its established markets, but "SES is still determined to bring new capacity to the Indian region to support the continuing strong performance of DTH platforms there."
    In a research note, Natixis Securities Satellite Equity Analyst Eric Beaudet said a majority of SES’ growth came on the back of a surge in services margins following the deconsolidation of ND Satcom, which is in the process of being sold. Beaudet also said he felt SES’s forecasts for the future were disappointing. "The group has had to lower its growth guidance for 2011 and beyond owing to a delay of about three months in launching the QuetzSat-1 and SES-4 satellites, which are scheduled for 2011, as well as technical problems on the AMC-16 satellite. So SES is now looking for an estimated 3 percent revenue growth in 2011 versus our estimate of 6 percent
    Benjamin Rousseau, a satellite equity analyst at CM-CIC Securities, agreed that SES had issued a conservative forecast. "The robust performance of 2010 is somewhat dimmed by a prudent sales outlook for 2011 and the medium term," Rousseau said in a statement.
    SES’ competitor Eutelsat reported revenues of 575.9 million euros ($782 million) in the second half of 2010, an increase of more than 13 percent compared to the same stage last year, with net profits jumping 25 percent to 174.4 million euros ($236.8 million).
    Beaudet said Eutelsat’s results slightly exceeded expectations as demand for satellite capacity remained solid with video revenues rapidly growing despite the loss of the W3B satellite in November. "Note, however, that the difference between Eutelsat’s reported revenues of 576 million euros and the consensus forecast 570 million euros ($774 million) was largely attributable to the ‘Other’ division, which benefited from non-recurring revenues, such as compensation for the delay on the delivery of the W3B satellite. The EBITDA margin, meanwhile, came out a little lower than expected at 80.4 percent versus our 80.9 percent estimate, due to spending relating to the launch of the Ka-Sat satellite, but this was largely offset on the bottom line by lower-than-expected amortization charges," said Beaudet.
    Like SES, Rousseau also believes Eutelsat has given a conservative forecast for the year ahead, "We had expected the operator’s full-year sales target to be revised up, but it has remained unchanged at 1.12 billion euros ($1.52 billion). The management could justify this by the recent loss of W3B, but we believe, given the already high initial consensus of1.15 billion euros ($1.56 billion), it wanted to prevent any risk related to an upward revision."

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Analysts Call Scaled-Back SES, Eutelsat 2011 Projections ‘Conservative’

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