Why Sky Network Television revised its earnings guidance for FY21

Summary

  • Sky Network Television Ltd (ASX:SKT) has upgraded its earnings guidance for the financial year 2021.
  • The latest earnings guidance pegs the revenue to be between A$695 million and A$715 million, against the previous expectations of A$680 million and A$710 million. 
  • The net profit after tax (NPAT) has been upgraded to be in the range of A$37.5 million and A$45 million, against the previous expectations of A$20m and A$30 million.

Sky Network Television Ltd (ASX:SKT) on Wednesday announced a further increase in its earnings guidance for the financial year 2021. The previous guidance on 11 November 2020 was also built around positive profit and revenue expectations.

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The increased expectations on earnings for the financial year 2021 are on account of further one-off cost savings, a second-half management reforecast, ongoing cost control and continued improvement in satellite and streaming revenues.

The latest earnings guidance estimates the revenue to be between A$695 million and A$715 million, against the previous expectations of A$680 million and A$710 million. The earnings before interest, tax, depreciation and amortisation (EBITDA) too has been upgraded to be in the range of A$170 million to  A$182.5 million, compared to A$140 million to A$155 million.  Similarly, the company has increased the net profit after tax (NPAT) estimate to be between A$37.5 million and A$45 million, against the previous expectations of A$20m and A$30 million. However, the capital expenditure expectations remain unchanged at A$45 million to A$55 million.

Company commentary 

Commenting on the latest earnings guidance, Sky chief executive, Sophie Moloney said the ongoing improvements in the company’s satellite customer loyalty and further growth in the streaming revenues is an encouraging sign. Bringing down Sky’s ongoing operating costs remains in sharp focus for the company as it continues to provide the content that is valued by the customers, Moloney also said.

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The company’s revised guidance factors in the impact of the proposed sale of OSB assets to NEP New Zealand Ltd.

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Stock performance

On Tuesday, 2 February 2021, the shares of Sky Network Television Ltd settled unchanged at A$0.14, against the previous closing on Monday, 1 February 2021. The stock is down 7.14 per cent in January 2021.

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