SES anticipates stable revenue despite below-estimate quarterly core profit

Satellite company SES warned its 2023 core profit would miss market expectations after declining sales in its video and government arms weighed on 2022 earnings, sending its shares down 8% on Monday.

Satellite groups have seen their traditional sales in video broadcasting decline as they shift towards data, broadband, and mobile connectivity.

SES expects adjusted core profit of 1.01-1.05 billion euros ($1.07-$1.11 billion) this year, below analysts’ forecast of 1.13 billion euros in a company-provided consensus, and down from 1.11 billion euros in 2022.

It said the outlook assumed no changes to its launch schedule, including key satellites communication system project O3b mPOWER, expected to be commercially operational in the third quarter.

J.P.Morgan analysts underscored the “light” guidance in a note to clients.

Sales in SES’s video business, which distributes TV channels such as Sky, Canal+ and BBC, dropped 5.5% year-on-year. This mirrored European peer Eutelsat which reported declining video sales earlier this month.

“Our focus has been in limiting that decline,” Chief Executive Steve Collar said, adding SES expected a low-single-digit percentage decline for the video division going forward.

Annual sales of its networks business, which provides satellite connectivity for governments, telecoms firms and cruise lines, grew 2.0%, helped by the acquisition of DRS GES from Leonardo last year.

But the division’s governments unit saw sales fall 4.6%, mainly due to the U.S. withdrawal from Afghanistan.

Asked about industry consolidation, Collar said “the future will mean fewer, larger players”, but declined to comment on possible future deals for SES.

The European satellites industry is seeking consolidation to challenge the likes of Elon Musk’s SpaceX, with Eutelsat in the process of buying Britain’s OneWeb. Reuters