Shares in Inmarsat rose almost 10 per cent on Friday after the satellite communications group said that it has reached “a turning point” on its previously struggling core maritime business.
Inmarsat, which provides satellite services to ships, the military, aid workers, oil prospectors and people in remote areas, reported a 12.7 per cent year-on-year increase in first half maritime revenues to $200.9m, driven by solid growth in subscriber numbers.
“Our business is growing again. That’s something of a turning point for us,” said Rupert Pearce, chief executive.
“It’s been a strong performance across the board, led by maritime, which is the bedrock of Inmarsat and brings in more than 50 per cent of our revenue base.”
However, the UK satellite operator reported a fall in pre-tax profit from relatively flat revenues following the loss of a lucrative source of income from its LightSquared mobile phone venture in the US.
In 2011, the FTSE 250 group reported $238.1m in payments from Philip Falcone’s LightSquared, but those revenues dwindled after the LightSquared filed for bankruptcy protection in May.
The problems at LightSquared, which was renting radio spectrum from Inmarsat, knocked some $40m in revenues and $29m in operating profit from the London-listed group’s interim figures.
Inmarsat has also been adversely affected by the withdrawal of foreign forces from Afghanistan, which resulted in less traffic from government customers.
In the six months to June 30, group revenues edged up $1m to $684m, while pre-tax profit fell back from $255m to $222m.
Diluted earnings per share fell from 41 cents to 38 cents, and the interim dividend was boosted 10 per cent to 16.94 cents.
“Excluding LightSquared payments, continuing earnings before interest, tax, depreciation and amortisation of $174m was 10 per cent above consensus expectations,” said analysts at JPMorgan Cazenove.
“These results provide confidence in the medium-term guidance and the outlook for Inmarsat.”
The positive sentiment comes in contrast to a tough past few years for Inmarsat, which has seen its core business decline in the economic downturn and reported a spate of poor results.
The recession has meant fewer ships on the oceans using Inmarsat’s services, and its customers have spent less as they migrate from traditional phone satellite services to sending emails over data networks.
Inmarsat shares rose 9 per cent to 529.5p in afternoon trading.