- Sky Network Television (SKT) has posted strong profits and earnings for the first half of the 2021 financial year despite having to deal with COVID-19 blows
- The Kiwi TW broadcaster bolstered earnings by 30 per cent and slashed operating expenses by 18 per cent over the six months to December 31, 2020
- The result was a net profit after tax of NZ$39.6 (around A$36.5 million) — a 234 per cent increase on the prior corresponding period
- This profit bump came despite slightly softer revenue in light of the COVID-19 pandemic
- Sky says as its customer numbers continue to stabilise and overall churn trends positive, the company is continuing to listen to customer feedback
- Looking ahead, the company has reaffirmed its full-year profit guidance of NZ$37.5 million and NZ$45 million (between roughly A$34.6 million and A$41.6 million)
- Shares in SKT are down almost 3 per cent this afternoon to trade at 16 cents per share
Sky Network Television (SKT) has posted strong profits and earnings for the first half of the 2021 financial year despite having to deal with COVID-19 blows.
The Kiwi TV broadcaster bolstered earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$116.3 million (around A$107.5 million) for the six months to the end of December 2020 — an increase of 30 per cent from the NZ$89.7 million (around A$83 million) over the same time in 2019.
This earnings growth underpinned a whopping 234 per cent increase in profit, which came in at NZ$39.6 (around A$36.5 million) in the 2020 half-year compared to the NZ$11.9 million (around A$11 million) over the prior corresponding period.
Interestingly, this profit boost came on the back of a slight decline in half-yearly revenue to NZ$356.9 million (around A$330 million), which is just over seven per cent lower than the same half-year in 2019.
Sky said some of the difference in revenue was due to the impacts of COVID-19, but the company was able to balance the softer revenue out with reductions in programming costs and lower production spending.
The result was an 18 per cent fall in operating expenses to NZ$242.8 million (around A$224.4 million).
Sky Chairman Philip Bowman spoke highly of the company’s CEO on the back of the half-yearly results.
“Sky has a unique role to play as the content aggregator which can deliver to all of New Zealand, and Sophie Moloney and her team have a clear focus to maintain performance in the coming months and years,” Philip said.
Customer stabilisation
Despite the struggles brought on by the coronavirus pandemic, Sky said its total Sky Box customer numbers are continuing to stabilise even when compared to pre-COVID times.
Over the December half-year in 2019, Sky saw a 3.2 per cent reduction in customer numbers. Over the same period in 2020, this number fell to a 1.8 per cent reduction.
Moreover, thanks to a long-term partnership with Vodafone, gross churn is continuing to trend positively, according to Sky CEO Sophie Moloney.
“Our strong base of loyal customers who enjoy Sky via their Sky Box in the home, and our Sky Go app when they’re on the move, is incredibly important to us,” Sophie said.
“We will continue to focus our efforts to better understand the needs of these customers in order to deliver added value to them.”
She said the company has been listening to customer feedback to tailor the Sky offering to the needs and wants of New Zealand customers.
What’s next?
Sky bolstered its earnings guidance for the 2021 financial year in early February and today reaffirmed this new guidance.
For the full year, Sky expects between NZ$695 million and NZ$715 million (between roughly A$642 million and A$660 million) in revenue.
The company is predicting between NZ$170 million and NZ$182.5 million (between roughly A$157 million and A$169 million) in EBITDA.
Full-year net profit after tax is expected to land between NZ$37.5 million and NZ$45 million (between roughly A$34.6 million and A$41.6 million).
On top of this, the company said it plans to maintain its sharp focus on savings and cost reduction while working to support customer requirements and wants.
The company had NZ$123 million (roughly A$114 million) in cash on hand at the end of December alongside undrawn debt facilities to repay NZ$100 million (roughly A$92.5 million) of bonds maturing in March 2021.
Following today’s half-yearly report, shares in SKT are down 2.94 per cent to 16 cents per share at 2:11 pm AEDT. The company has a $297 million market cap.