Inmarsat returns to growth in second quarter but interim profits fall 7pc

Although its maritime market remains in the doldrums, Inmarsat posted a respectable set of interim results on Thursday as the satellite services group surprisingly returned to growth in the second quarter thanks to growth from the aviation sector, government contracts and its deal to supply US mobile network Ligado Networks.

Full-year guidance was maintained, as revenues in the six months to 30 June rose 2.1% on the previous period to $629.0m, with earning before interest, tax, depreciation and amortisation (EBITDA) up 7.5% at $368.4m.

However, profit before tax for the half year fell 7% to $154.4m and earnings per share fell 7% to 27 cents, though the interim dividend was upped 5% to 20.59 cents per share.

While the commercial shipping market remains in recession, putting pressure on maritime sales, the FTSE 250 company's GlobalXpress (GX) ultra-fast broadband service is driving demand and market share, with Thursday seeing the signing of a strategic partnership with a third large maritime VSAT reseller that takes the pipeline to more than 5,000 Fleet Xpress installations over the next five years.

Chief executive Rupert Pearce said strong customer interest for GX was evident in all business units.

"In Government the take up of GX is gaining traction with rising revenues and strong operational interest," he said, also announcing that a rival's appeal over Inmarsat's contract with the US Navy had been dismissed and the one-year contract would go ahead with options for extension to 2021.

"In Aviation, whilst closing cabin connectivity deals is taking longer than we expected, we have continued to make further progress, competing strongly in ongoing airline tenders for passenger connectivity services and the build out of our European Aviation Network is running to plan."

Inmarsat is currently conducting a worldwide live demonstration of the GX Aviation services to major airlines, which Pearce said had been "extremely well-received".

On the Brexit vote, Pearce conceded that markets continue to be challenging and "the outlook is becoming much harder to call as the macro economic environment worsens", but pointed out that a significant proportion of the cost base is denominated in sterling, resulting in a lower dollar value for costs, while long and short term debt funding instruments are all dollar denominated.

"Inmarsat is therefore relatively well placed to withstand Brexit-related market challenges."