* Raises 2014 core profit guidance to $85-95 million
* Q2 OIBDA jumps to $41.6 million, above expectations
* Sees return to positive free cash flow in 2015
* Shares up 10 percent, biggest gain in 5 months
(Updates with guidance rise, cash flow outlook, more comments)
By Jason Hovet
PRAGUE, July 30 Broadcaster Central European
Media Enterprises raised its 2014 core
earnings forecast on Wednesday after a rebound in the Czech
advertising market gathered pace.
The company, helped by a financial lifeline from its main
shareholder Time Warner, is looking to win back
customers it lost last year to an aborted strategy of raising
prices in the midst of a TV advertising slump.
Under new management, CME has cut prices and completed
financing deals to give it breathing room - actions that
co-Chief Executive Michael Del Nin said on Wednesday were
starting to pay off.
CME's operating income before depreciation and amortisation
(OIBDA) jumped to $41.6 million in the second quarter, beating
the average estimate in a Reuters poll of analysts of $34.7
million and up from $8 million in the quarter a year earlier.
CME, which owns television stations in six central and
eastern European markets, raised its guidance for 2014 OIBDA to
$85-95 million from $80-90 million.
"Our results demonstrate the continuing significant
improvement in the company's financial position, and provide
further evidence that our turnaround is well under way," said
For the time being, CME's results paint a less rosy picture.
Its net loss widened to $52.5 million in the quarter, mainly
related to charges on debt and interest costs and discontinued
operations, according to analysts.
Still, CME shares rose the most in five months after the
results and were up 10 percent at 56.50 crowns at 1358 GMT.
The company, started by U.S. billionaire Ronald Lauder two
decades ago, confirmed it expected to return to positive free
cash flow in 2015.
This year's cash drain was even bigger than in 2013 because
of higher payments to suppliers of foreign programming after the
closing of new financing deals with Time Warner.
Many of CME's customers lost last year have returned and the
region's economies are growing again. Revenue rose 17 percent to
$204.9 million in the second quarter mainly due to the stronger
Czech business along with a rise in carriage fees in Romania.
But CME said it did not expect the pace of growth in these
segments to continue for the rest of the year, and reiterated it
would take a least a year for the Czech market to recover to
(Reporting by Jason Hovet; editing by Tom Pfeiffer)