Inmarsat set for faster growth after 2013 ends with a flourish

Thu Mar 6, 2014 5:25am EST

Related Topics

* Group Q4 core earnings broadly flat at $150.9 million

* Revenue in Global MSS business up 5.4 pct to $194.3 mln

* Solutions revenue down at $192.6 million

* CEO says group finished 2013 "with a flourish"

* Shares up 3.8 pct, bounce from recent lows (Adds CEO comments, analyst reaction, shares)

By Paul Sandle

LONDON, March 6 (Reuters) - Inmarsat Plc, the satellite company building a new global network, said it finished 2013 with an upturn in its core maritime, aviation and land services business, giving it momentum for faster growth in the next two years.

The British group, which provides communications to shipping, aircraft and remote locations, reported revenue growth of 5.4 percent in its core Global MSS business to $194.3 million in the fourth quarter, beating market expectations by 4.5 percent.

Chief Executive Rupert Pearce said the group had finished 2013 "with a flourish".

"We have a couple of good months behind us and feel operationally and financially we will deliver against our objectives this year," he said in an interview on Thursday.

Its shares, which had fallen earlier this week to their lowest since December, were trading up 3.8 percent at 699.5 pence by 0934 GMT.

Analysts at brokerage Jefferies said revenue was ahead on every line, including in its Solutions business which has been hit by cuts in U.S. government spending.

"Coming into the quarter, investors had seemingly been worried about downgrades on the back of deterioration in the ... Solutions business and perhaps even some contagion into Inmarsat Global," they said. "The 4Q13 results strongly dispel these concerns."

Inmarsat is building a Global Xpress network that will provide more capacity and faster broadband speeds. The first satellite is in testing, Pearce said, and two more will be launched by the end of the year to give global coverage.

The increase in investment has coincided with cuts by Inmarsat's biggest government customer, the United States, which is the source of between 15 and 20 of its revenue.

"In the U.S. the market continues to be challenging," Pearce said. "(But) there is cautious confidence, I would say, that we are beginning to see the bottom of the cycle, and with our unique products, particularly Global Xpress, coming in Q3 this year, there is an opportunity to turn it around a bit."

Inmarsat said revenue in its Solutions unit fell to $192.6 million in the quarter from $208.2 million a year ago. Overall core earnings for the group were broadly flat at $150.9 million.

Pearce reiterated his target of 8 to 12 percent compound annual growth in the period 2014 through 2016, adding growth would be back-end loaded as new services are launched. (Editing by David Holmes)

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