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LONDON (Alliance News) - Sky PLC said it has made a "strong start" to its current financial year, as it reported a 10% rise in operating profit for its first quarter, boosted by a good performance from the UK and Ireland as well as from Germany and Austria, which offset a decline in Italy.
For the quarter to end-September, Sky reported an operating profit of GBP375 million, up from GBP347 million a year before, on revenue of GBP2.79 billion, up from GBP2.74 billion.
In the UK and Ireland, revenue rose 7% to GBP2.00 billion from GBP1.87 billion, bolstered by strong customer growth of 77,000.
In Germany and Austria, revenue rose 11% to GBP336 million from GBP339 million. It added 94,000 new customers in the region.
However, in Italy revenue fell 4% to GBP454 million from GBP527 million, as the business reported a loss of 37,000 customers, which Sky attributed to a one-time increase in high-definition subscribers in the previous year.
Total costs were up 5% as the absence of costs from the Ryder Cup and the FIFA World Cup was partially offset by higher costs related to German football league Bundesliga, as well as continued investment in its content portfolio, securing exclusive rights to the Fox Sports channel in Italy and launching a Star Wars channel in the UK.
Sales, general and administrative costs were up 6% as the company worked to maintain its market share in the UK and Italy to mitigate the loss of the Champions League rights to rival BT Group PLC, and it invested in marketing in Germany to drive customer growth, although this was partly offset by its operating efficiency programmes in Italy and the UK.
Elsewhere the company said it had signed a deal with SANZAR to secure rugby fixtures in New Zealand, Australia, South Africa and Argentina, live for five years.
The first quarter results came in ahead of consensus analyst forecasts provided by the company. Consensus showed that analysts expected Sky to report earnings before interest and tax of GBP366 million for the quarter, on revenue of GBP2.78 billion.
Sky said it had continued to make good progress on the integration of its three businesses, and said it is on track to hit its run-rate synergies target as it exits the financial year 2017.
"We want to make the viewing experience even better for all our customers. Following the success of our proven connected home strategy in the UK and Ireland, we are beginning to roll this out across our other territories. We now have almost 10 million connected households across the group, driving over 750 million views to our connected services this quarter alone," said Chief Executive Officer Jeremy Darroch in a statement.
"As these results show, we are delivering against a clear set of plans across Europe, and are well positioned for the growth opportunities ahead," Darroch added.
Shares in Sky were up 3.4% at 1,105.00 pence Wednesday morning, one of the best performers in the FTSE 100.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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