Core divison on the mend at Inmarsat

Second quarter earnings at Inmarsat were down but the satellite operator was encouraged by progress in returning its core Global MSS business to growth.

Total revenue in the second quarter of 2012 fell to $329m from $359m the year before, but Inmarsat Global MSS revenue pulled out of its recent dive to improve revenue by 4% to $189m from $181m in the second quarter of last year. The number of active MSS terminals was up 13% year-on-year.

The Inmarsat Solution division's revenue rose to $205m from $189m in the second quarter of 2011.

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Second quarter earnings before interest, tax, depreciation and amortisation (EBITDA) tumbled to $176m from $223m.

Looking at the half-year picture, total revenue was barely changed year-on-year at $684m, with Inmarsat Global MSS's revenue down 6.6% to $396.2m from $364.7m the year before, while Inmarsat Solutions grew revenue by 8.6% to $396.2m from $364.7m.

Half-year EBITDA drooped to $381m from $427m, with performance blighted by the difficulties suffered by Inmarsat's business partner, LightSquared, the cash-strapped US 4G LTE network operator. Taking LightSquared out of the equation, EBITDA eased to $332m from $336m the year before.

Profit before tax in the first six months of 2012 fell 12.6% to $222.8m from $254.8m in 2011. The decrease was due primarily to decreased revenues from Inmarsat's cooperation agreement with LightSquared and increased net operating costs, though this time round the group benefited from the inclusion of a full six month contribution from Ship Equip (acquired on 28th April 2011).

"During the first half 2012, despite a poor macroeconomic environment and a continuing loss of revenue from government users in Afghanistan, we have made solid progress in returning our Inmarsat Global MSS business to growth," the group said.

Trading so far this financial year has given the group no cause to change its medium term revenue targets.

At the end of June the group had net borrowings of $1,468m. "We remain fully funded as to all our capital needs for the foreseeable future," the group said.

An interim dividend of 16.94 cents has been declared.

JH