* First-quarter OIBDA up 29 pct to $22.1 mln
* Forecasts 2017 OIBDA growth of 13-17 pct
* To begin paying down Time Warner loan in November
* Expects debt costs to fall further
(Adds company's 2017 outlook, comments on debt)
By Jason Hovet
PRAGUE, April 26 Shares in Central European
Media Enterprises (CME) soared to a 3-1/2 year
high on Wednesday after the broadcaster reported
estimate-beating profit and forecast double-digit growth for
Powered by firming advertising spending in its six central
and eastern European markets, CME intends to use rising earnings
this year to begin reducing a $1 billion debt pile that forced
it to seek a financial lifeline from main shareholder Time
Warner in 2013.
CME's operating income before depreciation and amortisation
(OIBDA) rose 29 percent in the first quarter to $22.1 million on
revenue up nearly 5 percent at $135 million.
For the full year, CME forecast core profit growth of 13-17
percent at constant rates, along with an increase in free cash
flow before interest payments to between $105 million and $110
million, against $96 million last year.
The results and outlook lifted CME stock by as much as 20
percent, with its Prague-listed shares up 11.5 percent at 100
Czech crowns ($4.05) by 1445 GMT.
The gains pushed CME shares back towards prices last seen
before the company warned markets in October 2013 that it needed
Time Warner's help to stay afloat, wiping more than 50 percent
off its value.
CME has since refinanced several times to cut debt costs,
with the most recent being last month's repricing deal with Mark
Warner to cut its weighted average borrowing cost by 150 basis
points to 7.25 percent.
That cost can fall by a further 125 basis points if the
group's net leverage ratio falls below 6 times earnings this
year. CME reiterated on Wednesday that this target is
achievable, with the ratio having dropped to 6.3 at the end of
the first quarter, from close to 7 at the end of 2016.
Growth in Romania provided the biggest earnings lift in the
quarter, overtaking the Czech market that has previously been
the company's main profit driver.
CME also benefited from increased advertising spending
across, up an estimated 9 percent at constant rates, while the
company's carriage fees and subscription revenue grew by 15
percent at constant rates.
"These great financial results, combined with the recent
transaction to lower the cost of all of our outstanding debt,
have made the first quarter one of significant progress and
achievement, causing us to be very optimistic about the rest of
2017," Co-Chief Executive Michael Del Nin said.
"We feel confident that we are on track for yet another year
of strong earnings growth and significant deleveraging."
CME said that after interest and guarantee fees due this
year it expects free cash flow of $47 million to $52 million and
that it would use excess cash from November to begin repaying a
2018 Euro Term Loan worth $268 million.
($1 = 24.7080 Czech crowns)
(Editing by David Goodman)