Sky (LON:SKY) has updated investors on its half-year performance this morning.
Highlights from Sky's statement:
· Operating profit of £679 million, after absorbing £314 million step up in Premier League costs
· Earnings per share of 28.3 pence, 5% lower
· Statutory results: 12% increase in revenue; operating profit of £461 million; EPS of 18.8 pence
· Run rate synergy target of £200 million achieved early; further operating efficiency plans underway
· Significant progress made on executing our strategy for growth; launched Sky Mobile in UK, our next generation box - Sky+Pro - in Germany and Austria, and Sky Adsmart in Italy
· Record on demand viewing of two billion streams and downloads as we continue to deliver the best value to customers
· Clear set of plans in place for 2017
Jeremy Darroch, Group Chief Executive, commented:
"We have delivered a strong first half performance across the group, continue to make significant progress against our strategy and remain on track for the full year.
Across the half we have continued to drive customer and product growth in all our markets, adding over 500,000 new customers - faster growth than last year - and selling two million products. That means, in the past three years and since the Skys have come together, we've now added 2.5 million customers and total products are up almost 25%. This has resulted in sector leading revenue growth of 6% which we've achieved despite some pressure on discretionary consumer spending across Europe and a decline in the UK advertising market.
In a year in which we are absorbing significantly higher programming costs, as a result of the step up in Premier League costs, our financial performance has been good. To put this into perspective, our first half operating profit of £679 million is down £65 million on the prior year despite absorbing an additional £314 million of Premier League costs, highlighting the strength of our underlying financial performance. This has been supported by the efficiency of our operating model and the achievement of our £200 million synergy target six months early.
We remain confident in our strategic plans and have made significant progress against them. We've launched Sky Mobile in the UK, delivered further enhancements to the customer experience across the group and extended our reach in Europe's largest TV market with the launch of Sky Sports News free-to-air and Sky 1 in Germany and Austria. Whilst churn in the UK has remained higher than planned, we have a full set of actions to address this, including replicating the success of our Italian loyalty programme which has resulted in reduced churn.
We enter 2017 focussed on giving more quality, choice and value to our customers. In the UK we plan to launch our Sky TV service without the need for a satellite dish for the first time, at the same time as pushing ahead in the £15 billion mobile market. We are continuing to build our European TV production studio with 100 original series going into production this year. And we will broaden our businesses further with the launch of Sky Store in Germany and Austria and the full roll-out of our targeted advertising service, Sky Adsmart, in Italy and Ireland.
Whilst we expect the backdrop in our territories to remain uncertain, we are on track as we enter the second half of the financial year and we remain focused on delivering our clear strategy for growth."