Inmarsat sales soften in second quarter, guidance maintained

First half results from Inmarsat showed sales growth slowed slightly and profits declined in the second quarter but the satellite operator kept full year guidance unchanged.

Revenues of $688.2m for the six months to 30 June were up 9.4% year-on-year after the second quarter sales growth softened to 7.7% as maritime and enterprise sales retreated further.

Earnings before interest, tax, depreciation and amortisation fell 3.6% in the second quarter, dragging the first-half gain down to 2.2% after a strong first quarter.

Profit before tax fell 60% to $61.8m due to higher depreciation and finance costs plus a $72m charge due to change in fair value of a derivative.

Adjusted earnings per share fell 11% to 0.24 but the interim dividend was increased by 5% to 21.62 cents per share

In maritime, where the performance was up against a tough comparative period last year, revenues fell 5% in the second quarter, let down by continued declines from legacy products that obscured strong growth in higher-bandwidth services and solid L-band revenues.

Revenue in the legacy enterprise business declined 14.5% in the second quarter but chief executive Rupert Pearce, feel it remains a business area "with strong medium to long term growth potential" in energy and in Internet of Things markets including transportation, e-logistics, agriculture, smart cities and mining and construction.

Happily for the FTSE 250 group, government sales improved to 41% for the second quarter, taking the half year to$187m, up 33% thanks to a military-related contract with Boeing and a "material new, confidential and high margin contract" in the second quarter.

Due to the one-off nature of some government revenue, the significant revenue rise the first half will not be sustained during the second.

The aviation arm also had a strong second quarter, with revenues up 37% to take the first half to $90.1m, a 40% improvement on the same period last year.

Two satellites were launched in the first half: a fourth for the GlobalXpress superfast broadband network and the Inmarsat-S EAN satellite to provide coverage for its new inflight internet service for airlines, the European Aviation Network.

The EAN remains on track to be commercially deployed towards the end of this year, Inmarsat said, while a fifth GX satellite is expected to be launched during 2019.

"We remain confident about the medium to long term outlook for Inmarsat. However, whilst we have delivered a robust performance in recent quarters, our markets remain challenging and the outlook continues to be difficult to predict," the company said, reiterating its 2017 revenue guidance, excluding Ligado, of $1.2-1.3bn and $1.3-1.5bn for 2018.