Inmarsat Q1 dented by US government cuts

Mobile satellite service provider Inmarsat saw first quarter earnings dwindle due to the impact of President Obama's US budget cuts, which hit margins at its Solutions business.

Mobile satellite service provider Inmarsat saw first quarter earnings dwindle due to the impact of President Obama's US budget cuts, which hit margins at its Solutions business.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2.2% to $154.2m as revenues and under-pressure margins in Solutions were further compressed by US budgetary pressure.

However, the group said it was making "rapid progress" with its massive Global Xpress programme and that deployment plans for its new satellite launch "remain firmly on track", which should mean the first satellite deployment before the year-end, with the completion of global coverage in 2014.

Flat revenues at the Solutions arm of $189.5m in the three months to March 30th meant that, despite a 3.7% rise in mobile satellite services (MSS) to $184.6m, total revenues climbed only 2.4% to $310.8m.

Chief Executive Officer Rupert Pearce said the Solutions segment had seen results in line with expectations from three of its four business units.

"However in our US government business unit, we have seen a sudden and pronounced deterioration in both demand and profitability, in each case principally related to US budget cuts. This has led to further margin compression in the Solutions business in the first quarter and we expect the current adverse market conditions for our US government retail activities to continue for the time being."

The company has aimed to mitigate this by cutting costs for the US government business unit and by implementing other cost controls across the group.

The wholesale maritime MSS business continues to thrive, with revenues up 8.7% and Inmarsat maintained momentum in subscriber additions for new services.

Pearce said the results provided for "continued confidence in our outlook for full year revenues at the wholesale level".

Shares in Inmarsat were down 6.7% at 699p at 10:00 on the morning of the announcement.

OH

Recommended

Too embarrassed to ask: what is short selling?
Too embarrassed to ask

Too embarrassed to ask: what is short selling?

Short sellers are often accused of unfairly driving share prices down to make a quick buck. But short selling is a perfectly legitimate – if risky – t…
26 Jan 2021
Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Most Popular

Bitcoin does consume a lot of energy – but here’s why it’s worth it
Bitcoin

Bitcoin does consume a lot of energy – but here’s why it’s worth it

Some people question bitcoin’s legitimacy because it uses huge amounts of electricity to maintain its network. But that’s not a failing, says Dominic …
27 Jan 2021
Joe Biden’s spending spree will lift American spirits and markets – but it comes with a sting in the tail
US stockmarkets

Joe Biden’s spending spree will lift American spirits and markets – but it comes with a sting in the tail

New US president Joe Biden is planning to throw trillions of dollars in stimulus at his country’s economy. Markets will love that. But it comes with a…
25 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021