[Satellite TODAY 02-22-13] It has been an eventful 24 hours for European satellite operator SES, which posted its 2012 full-year results on the same day it confirmed Padraig McCarthy as its new CFO. In its fiscal report, the operator said it had missed its desired 2012 earnings targets due to revenue lost from a three-week delay in launching its SES-5 satellite, further solar array circuit failures on its AMC-16 satellite over North America and the lingering effects from Germany’s analog broadcast switch-off in April 2012.   

SES posted a 1.5 percent year-over-year increase in full-year revenue and a 1.6 percent increase in core profits, compared to its targets of 2 and 2.5 percent, respectively.

  The operator said it took a $142.8 million loss in Germany’s broadcast market in 2012 and a $17.1 million hit due to the delayed launch of SES-5, which aims to serve Europe, Middle East and Africa. Despite the setbacks, SES President and CEO Romain Bausch issued a projected 4 percent and 5 percent increase in revenue and core profit, respectively, and called 2012 a highly successful year for the operator.

   “As German analogue broadcasting was finally switched off, taking 108 million euros out of our revenue, our strong sales pipeline not only overcame this challenge, but delivered absolute top line growth,” Bausch said in a statement. “New capacity launched in 2012 will fuel growth in 2013 and 2014, as momentum is maintained in Latin America, Africa and Asia.  Having successfully launched three satellites in 2012, we will be launching another four spacecraft in 2013, which will add over 100 new transponders to support our growth, especially in the developing markets.” 

   Bausch reiterated the operator’s three-year revenue and EBITDA CAGR guidance of 4.5 percent. “We also look forward to two launches, with a subsequent entry into service, of the O3b Networks constellation, an exciting initiative which we expect to deliver substantial value in the years to come,” he said.

   SES saw an increase in depreciation during the 2012 full fiscal year due to new satellites entering service, amplified by the stronger U.S. dollar exchange rate, and impairment charges recorded in respect of solar array circuit failures on AMC-16.

   ING Analyst Emmanuel Carlier said that while SES’ results fell short of expectations, the operator’s stocks have performed well in the past few weeks. “We currently rate SES as a buy with a 24-euro price target,” he said in a Feb. 22 research statement. “Long-term, the fundamentals of SES’ business remain strong.”

   As a group, SES’ profits increased 5 percent from the 2011 full-year, driven by operating earnings and taxation to reach 648.8 million euros by the end of December 2012. “The positive contribution from taxation resulted from the release of 107.9 million euros of tax provisions. Excluding this release, the effective tax rate would have been 10.6 percent,” SES said in its company earnings release.

   The group’s contract backlog at the year-end was 7.5 billion euros – a record high for SES. “[Our backlog] reflects excellent progress in both renewals and new business, including contracts for DTH platforms signed in the 2012 fourth quarter in Latin America on SES-6, and in Europe,” said Bausch. 

   Simultaneously, SES announced that its board of directors appointed its Senior Vice President Financial Operations and Business Support Padraig McCarthy as its new CFO and member of the company’s Executive Committee. He replaces current CFO Andrew Browne, who decided to relocate back to The Hague and take up a position as the CFO of O3b Networks. SES is a strategic investor in O3b Networks with a 47 percent stake in the company. The CEO switch will become effective April 4, when SES’ Annual General Meeting of Shareholders is asked to approve the company’s 2012 financial results. 

   Padraig Mc Carthy joined SES in 1995 and previously served as CFO of SES Astra – the European subsidiary of global satellite operator SES until 2011. 

“I have worked with Padraig over his 18 years with SES and I have seen him developing along the major steps of SES’ growth,” said Bausch. “Padraig is a skilled satellite finance executive whose business acumen has been beneficial to the company. I welcome Padraig to the Executive Committee and look forward to continue working with him to further grow our business in the interest of our customers as well as our shareholders.”

   SES successfully launched three satellites – SES-4, SES-5 and ASTRA 2F – in 2012, adding a total of 129 C- and Ku-band transponders for growth markets, and the activation of the Ka-band payload on its Astra 2F spacecraft to enhance satellite broadband offerings in Europe. The Ka-band payload added 1.7 GHz to enable SES Broadband Services to deliver satellite connectivity with download speeds of up to 20 Mbps. In North America, SES’ revenue increased 5.7 percent to 422.1 million euros. The increase was largely due to new government service business and services rendered with the SES-3 Ka-band payload. 

   “Strong performance in the U.S. Government segment was driven primarily by the effective SES-GS response to new opportunities that became available as a result of changes in U.S. Government procurement practices,” SES said in the earnings release. “During the first half, NASA TV contracted one transponder on AMC-18 for HD and SD programming. The U.S. presidential election delivered an expected boost to Occasional Use (OU) services.  There was a record use of SES satellites over the United States and elsewhere.  Usage peaked at 1200 MHz across the fleet, with all available North American OU capacity filled. Additional demand was generated following the damage caused by Hurricane Sandy.”

   SES’ in-flight broadband connectivity services also continued to develop throughout 2012. In December, GoGo announced that it is contracting capacity of more than 6 transponders on several SES spacecraft to offer in-flight broadband connectivity across the continental United States and on transatlantic routes. O3b Networks also continued the installation of SES’ ground network systems, in preparation for its service launch.