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Hungary's Magyar Telekom posts surprise Q4 loss as profit margins tighten
February 28, 2013 / 6:16 AM / 5 years ago

Hungary's Magyar Telekom posts surprise Q4 loss as profit margins tighten

BUDAPEST, Feb 28 (Reuters) - Hungarian group Magyar Telekom posted a surprise quarterly net loss as it relied more on less profitable businesses and special costs like tax and severance payments weighed on the bottom line, the company said in a quarterly report on Thursday.

The fourth-quarter net loss was 1.61 billion forints ($7.13 million), compared with a forecast for a 900 million forint profit in a survey by financial news website

The company, a unit of Germany’s Deutsche Telekom , reported full-year revenue of 607.1 billion forints, up 1.6 percent, in line with recent guidance but ahead of original expectations as sales of retail gas and electricity, smart phones and TV sets rose more than expected.

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at 234.3 billion forints in 2012, a 4.4 percent decline. The company’s underlying EBITDA margin of 31.8 percent was down from 36.2 percent a year ago.

“This decrease reflects the increasing contribution of the lower-margin retail energy and (system integration and information technology) revenues, coupled with the continued decline of high-margin voice revenues,” the company said in its earnings report.

The company also warned of a depressed market environment ahead and said its profit margin, revenue, EBITDA and capital expenditures will all decline in 2013. A recently introduced special telecommunications tax in Hungary will also continue to erode the bottom line, it added.

“In the short-term, we expect market conditions to remain challenging due to sustained pressures on disposable income levels and continued intense competition, along with persistent negative impacts from recently introduced fiscal measures,” chairman and chief executive, Christopher Mattheisen, said.

The company should see revenues decline by up to 3 percent, reported EBITDA by 4-7 percent, and capital expenditures down by about 5 percent, Mattheisen said.

Quarterly revenue rose 3.4 percent to 164.9 billion forints, slightly above expectations for 159 billion.

($1 = 225.7953 Hungarian forints)

Reporting by Marton Dunai; Editing by Matt Driskill

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