Sky posts solid earnings growth as it rolls out new tech

Amid an ongoing takeover bid from 21st Century Fox, Sky reported a 5% increase in like-for-like revenue in its first half on Thursday, to £6.7bn.

The FTSE 100 company said established business EBITDA was ahead 15% in the six months to 31 December, to £1.2bn, while there was a 10% increase in EBITDA overall to £1.1bn,

Earnings per share advanced 11% to 31.3p, the board confirmed.

Sky said it added 365,000 new customers in the period to bring its total numbers to 22.9 million, while two million products were added to a new total of 61.7 million, and 20 million pay-as-you-go buys were made in the six months, up 8%.

It declared an interim dividend of 13.06p per share, up 4% from 2016, in addition to the previously-announced special dividend of 10p.

On a statutory basis, Sky reported 5% revenue growth, operating profit of £573m - up 24% - and EPS of 26.2 pence, an improvement of 39%.

Looking at its operations, the Sky board reported a “consistent execution” of its strategy, with on-screen viewing of Sky brands up 6%, and “record viewing” of Sky Originals, with future investment set to increase every year.

It acquired “significant” new rights during the half, including Warner Bros, and in Italy exclusive Formula 1 rights for the first time.

The new-generation Sky Q technology platform was launched in Italy, with the hardware now in two million UK and Ireland homes, and rolling out to Germany and Austria.

Sky was also launching its first Sky Q-over-IP service in Austria, and Sky over fibre in Italy, both without the need for a satellite dish.

Operating costs were said to be flat in absolute terms, and down 600 basis points as a percentage of revenue over last five years, to 34%.

The board explained that it was investing for future growth, with its Sky Mobile offer said to be “scaling well”, along with successful launches of Sky in Spain and Switzerland.

It said it had an “ambitious set of plans” for calendar 2018 and beyond.

“We have delivered excellent results,” said Sky group chief executive Jeremy Darroch.

“This performance reflects the investment choices we have made in recent years, allowing us to more than offset the pressure on consumer spending across Europe, as more customers continue to choose Sky for more of their services.”

Operationally, Darroch said the company saw “good customer demand” for its products and services.

“We now have almost 23 million customers taking 61.7 million paid-for-products and making 20 million pay-as-you-go buys in six months.

“In addition, we have made further strong progress on operational efficiency, keeping operating costs flat in absolute terms.”

Darroch added that, as Europe's “leading” direct-to-consumer television entertainment company, Sky was making good progress on its future growth plans.

“In content, our focus on high quality, differentiated local programming to complement what we acquire through our partners is working well.

“Viewing to Sky channels increased by 6% and, following both critical success and record audiences for Sky Original productions, we will be increasing our investment in original content each and every year.”

On the technology front, he explained that the company was “constantly” improving its customers' experience and making it easier for them to take Sky.

“In the UK & Ireland Sky Q is now in 2 million homes.

“We recently launched Sky Q in Italy and will roll out the service to Germany & Austria in the next six months.”

Darroch noted the company was also set to introduce Sky-over-fibre in Italy, and its first all-IP service in Austria, both without the need for a satellite dish.

“Looking ahead, we expect the consumer environment to remain challenging, however we remain confident in our strategy and our ability to execute our plans.”