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By Nolwenn Brossier
April 27 (Reuters) - Satellite company SES on Friday beat first-quarter core profit forecasts as strong growth in its networks division offset weakness in video, sending its shares up more than 10 percent.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) fell 8.7 percent to 304.4 million euros on a like-for-like basis, but that topped the 287.8 million euros expected by analysts in a consensus compiled for the company.
“I am particularly pleased to see the underlying growth that we anticipated in our SES Networks business coming through, fuelled by strong performance in our aeronautical Mobility and Government business segments,” Chief Executive Steve Collar said in a statement.
Satellite companies have faced challenges from online streaming services, which has raised doubts over the prospects for their core satellite television business.
“Satellites have been in the doldrums for ages, numbers have been poor, this is a beat versus expectations and we haven’t had a beat versus expectations for at least two years,” Berenberg analyst Sarah Simon said.
Simon also pointed to a short-squeeze as a possible factor driving the stock higher. According to data from Astec Analytics, 7.7 percent of outstanding shares were out on loan as of the close of trading on April 25, a sign of investors holding short positions.
Underlying revenue in the networks division rose 8.5 percent to 153 million euros at constant exchange rates, helped in part by the SES-15 satellite entering into service. The mobility business was the stand-out performer in the division, with underlying revenue up 30.4 percent at 37.4 million euros, driven by strong demand from aeronautical service providers in North America.
Underlying revenue in the company’s core video business fell 3.6 percent at constant exchange rates, a smaller-than-expected fall helped by stability in the revenue of media service MX1 with new business in Europe offsetting non-renewals.
The company, which sees an “encouraging commercial pipeline” for its SES-9 and SES-10 satellites, said its financial outlook remained unchanged.
Reporting by Nolwenn Brossier in Gdynia, additional reporting by Alan Charlish; editing by Jason Neely and Jane Merriman