Sky pleased with results as revenue rises, earnings slip

Sky reported on a “strong year” in its results on Thursday, reported a 10% increase in revenue on a comparable 52-week basis to £12.9bn, or 5% growth at constant currency.

The FTSE 100 company said EBITDA fell 3% on a like-or-like basis to £2.14bn, with operating profit of £1.47bn, which the board said was down £97m after absorbing £629m of Premier League costs.

Earnings per share were 3% lower at 61.4p.

The subscription broadcaster said it returned to profit growth in the fourth quarter, with operating profit up 8% to £455m and earnings per share ahead 19%.

On a statutory basis, Sky saw 8% revenue growth, operating profit of £964m, and earnings per share of 40.6p, up 4%.

“Sky's growth and development has continued to be strong in 2017,” said group chief executive Jeremy Darroch.

“We have driven a 10% increase in revenue on a comparable 52 week basis to £12.9bn despite market headwinds.

“Operating profit is excellent, down £97 million despite additional Premier League costs and investment in new businesses, with particularly strong results in Germany & Austria and Italy where operating profit increased by £115m.

“As we exit a year of investment, we returned to profit growth in the fourth quarter with operating profit up 8% and EPS up 19%.”

Sky saw 686,000 new customers to 22.5m during the period, with 77,000 in the fourth quarter, while it reached a five million customer milestone in Germany in July.

Its board described an “excellent” year on screen with more than 100 million viewers across Europe and a record number of Sky Original productions on air including Riviera, the company’s most popular premiere series to date.

It also claimed to be the “partner of choice” for content providers, with “significant” new rights acquired across all markets.

The company’s new Sky Q hardware was now in more than one million UK homes, and the newly launched Sky+Pro hardware in Germany & Austria had reached 460,000 homes.

Sky said it was also expanding into new markets and building new revenue streams with the launch of Sky Mobile achieving high single-digit share of sales in June.

The board said it had a “strong” set of growth plans for the 2017/18 financial year.

“Looking ahead we have a strong set of growth plans for the year,” Jeremy Darroch explained.

“We will be increasing investment in Sky originals by 25% as we build on our track record for producing world-class entertainment.

“We will make the customer experience ever better as we roll out Sky Q to Italy, Germany and Austria while also launching Sky Q without the need for a satellite dish.”

Darroch said the company was creating 300 new technology roles to “further enhance” its capability to deploy in and out-of-home streaming platforms.

“Sky Mobile will continue to scale up as we take advantage of the headroom in our customer base and offer our customers more Sky products.

“Loyalty will be recognised and rewarded through a new tenure-based loyalty programme in the UK, building on the outstanding success of a similar programme in Italy.”

Sky would also continue to identify opportunities to reach new customers through the recently-launched new portfolio of channels and pricing to drive growth in Sky Sports UK, and Darroch said it intended to launch a “simple and affordable” over-the-top service in Spain.

“We will do all this while continuing to execute against our operating efficiency plans.

“We enter 17/18 in a strong position with significant growth potential.

“Despite the broader consumer environment remaining uncertain, we are confident of delivering on the plans we've laid out as we continue to give our customers the best content, great products and industry leading service.”