Sunday, April 14, 2024

Sky NZ Delivers Strong First Half Result, Increases Interim Dividend

New Zealand’s Sky Network Television Limited (Sky) has announced another period of growth, delivering increases in all key metrics through a strong focus on execution.

Key results include:

  • +3.7% growth in Revenue to NZD$392.7 million, driven by strong growth in Sky Sport Now, Advertising, and Broadband
  • +11.1% growth in EBITDA to $81.7 million
  • +10.5% growth in NPAT to $29.0 million
  • Increased Interim dividend of 7 cents per share, 100% imputed (from 6 cents per share, +16.7%)
  • Full Year dividend guidance increased to at least 17.5 cents per share (from at least 15 cents per share, +16.7%)
  • New share buyback programme for up to $15 million to be launched following the expiry of the current programme

Chief Executive Sophie Moloney said: “Sky has delivered a strong first half performance that demonstrates Management’s ability to execute on strategy to drive revenue and margin growth. The successful delivery of key initiatives such as the uplift in our advertising capability, the revitalised free-to-air channel Sky Open, and the launch of the Sky Pod, are all examples of this strategic execution.

“I’m particularly proud of the way we are evolving as a team. With greater clarity of purpose and stronger engagement, the investments we’ve made in our people are also showing through in what we’re achieving as a business.”

Chairman Philip Bowman commented: “Sky’s consistent performance over a sustained period has been achieved off the back of a clear strategic plan and a great deal of hard work. It is pleasing to see the determined execution delivering benefits for our customers, employees and partners, as well as investors with an increase in the first half dividend.”

Sophie added: “We delivered an exceptional array of content for sports fans with major events such as the ICC Cricket World Cup, Netball World Cup, Women’s FIFA World Cup, and of course the Men’s Rugby World Cup adding to the regular calendar of events and season-long competitions – including the Warriors’ phenomenal run to the NRL finals.”

“This contributed to record customer and revenue results for Sky Sport Now and saw more Sky Box and Sky Pod customers adding a sports package, with increased viewership across both services. Sky’s unrivalled sports offering was also enjoyed by many more New Zealanders at pubs, clubs, gyms, hotels and motels, and also through our free-to-air channel, Sky Open, which shared a number of these sporting moments throughout the country.”

Sky’s entertainment streaming service Neon faced challenges as a result of protracted industry (writers’ and actors’) strikes in the US. This delayed the delivery of new titles to support subscriber acquisitions and win-backs, adversely impacting customer numbers.

Sophie added: “We made the deliberate choice to slow the rollout of the new Sky Box to resolve some final teething issues. At the same time, we improved the service experience and began delivering on a programme of product enhancements. While the take up has been slower than we planned, we are already seeing much higher subscriber satisfaction levels. With 58 thousand new Sky Boxes now in use, feedback from customers is providing confidence the changes are resonating. We are now actively in market with a new Sky Box campaign that includes changes to the customer proposition to encourage take-up.”

“The decision to invest in advertising capability has already delivered returns. Innovative new formats to support advertisers have increased the value derived from our existing content investment. The impact was a 12% lift in revenue through a period where revenue for the sector fell by 16%. At the same time, the team developed new advertising capabilities in the digital space that were successfully launched in January.”

“While the advertising market is experiencing headwinds, our long-term confidence in pursuing this strategic growth initiative is increasing.”

Many Sky Business customers are benefitting from rising tourist numbers. Revenue grew, and the introduction of a premium product for accommodation providers and the launch of Sky Pod are providing new opportunities.

Sky Broadband continues to grow customers and delivered revenue growth of 45% whilst increasing margins.

As well as benefitting from the strong performance of Sky Sport Now, Advertising and Broadband, revenue growth of 3.7% included price increases that lifted average monthly customer revenues across every subscription product. The value of Sky’s content continues to support appropriate increases, with a further rise to sports pricing coming into effect early in the second half.

Operating expenses rose 1.5%, largely due to variable costs from the growth in Broadband, Advertising and Sky Sport Now. Programming cost increases were kept to within $2m year on year, as known rights increases were largely offset, and with the savings targeted from FY23 initiatives achieved.

Sophie added: “As a result, Sky delivered 11.1% growth in EBITDA and 10.5% in Net Profit after Tax. Our track record of strong cash performance continued, with $71.5 million generated from operations enabling investment in new products and a higher return for shareholders. Sky’s balance sheet remains strong, with cash on hand at 31 December of $47.4 million and a $150m undrawn bank facility.

“Capex investment is tracking in line with guidance as we invest at scale in new Sky Boxes and Pods, while at the same time we’re capturing efficiencies in development projects and through optimising self-install options that will begin to reduce capex intensity during FY25.”


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