Q4 2014 Highlights
- Net sales up 6% at constant FX & up 2% on an organic basis
- Operating income before associated company income and non-recurring items up 2% to SEK 468m (461)
- Total EBIT of SEK 611m (417) and net income of SEK 471m (261)
- Basic earnings per share of SEK 6.70 (3.68)
- Cash flow from operations of SEK 338m (396), with net debt position of SEK 362m (772) equivalent to 0.2x trailing 12 month EBITDA (excl. non-recurring items)
- Board of Directors to propose increased annual cash dividend of SEK 11.00 (10.50) per share, representing pay-out ratio of 57% (56) excluding non-recurring items
- Adverse FX movements to impact 2015 reported earnings (see page 2 – CEO comments)
President & CEO’s comments
Delivering on strategy
Our fourth quarter results again delivered a combination of organic and acquisition-led growth to generate higher sales and profits. Our strong cash flow generation and overall financial position are reflected in the proposed 5% higher annual dividend payment of SEK 11 per share, which is equivalent to a 57% pay-out ratio.
We are delivering on our strategic plans and moving towards our objective of being the leading digital entertainment company in each of our major markets. Our Nordic broadcasting business again delivered higher sales and profits, as the growth in our online businesses more than compensated for lower linear viewing levels and declining advertising markets. The Emerging Markets businesses grew their sales on a combined basis but higher profits in the free-TV business were offset by negative pay-TV earnings impacts. We have continued to enrich the content offering across all of our platforms with exclusive deals for premium sports and studio rights. Our commitment to show the best content on multiple devices reflects media consumption trends and has driven higher online and mobile subscriber volumes and viewing shares, and led to the even broader availability of our entertainment products on third party networks.
The law prohibiting the sale of advertising on pay-TV channels in Russia has taken effect from the beginning of 2015. An amendment to the law that would allow advertising on pay-TV channels with 75% Russian content is now pending Presidential signature. We are continuing to explore the options available to our Russian operations and holdings in order to comply with the amendments to the Russian law regarding foreign ownership of Russian mass media companies from the beginning of 2016. We are working with a range of potential solutions, in order to best protect the interests of the stakeholders in these entertainment businesses that we have built into some of the most popular in Russia.
FX & Outlook
We are being impacted by significant adverse FX movements and, especially, the impact of the appreciation of the US dollar on our group-wide programming costs, and the depreciation of the Russian ruble on our Russian pay-TV channel business. Based on these changes, our US dollar content costs would be inflated by approximately SEK 200m in 2015, net of forward currency hedges, and the profits for our pay-TV emerging markets business would be negatively impacted by approximately SEK 100m in 2015. We are accelerating and extending actions to balance costs and optimize investments across the Group. The operations continue to perform well independent of the currency effects.
We are both developing our existing businesses and acquiring complementary new companies. As a result, we already have established digital leadership positions in a number of fields and will add to these across our unique footprint. We are offsetting falling linear viewing with higher prices as linear TV continues to offer attractive return on investment for advertisers, and we are attracting larger and larger online audiences, while remaining well positioned to capitalize on media spend growth in the emerging markets. All of which is contributing to our positive operating performance.
Jørgen Madsen Lindemann
President & Chief Executive Officer
The company will host a conference call today at 09.00 Stockholm local time, 08.00 London local time and 03.00 New York local time. To participate in the conference call, please dial:
Sweden: +46 (0) 8 5033 6538
UK: +44 (0) 20 3427 1905
US: +1 646 254 3367
The access pin code for the call is 7523722. To listen to the conference call online and for further information, please visit www.mtg.dev .
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