By Paul Sandle
LONDON, March 8 (Reuters) – British satellite company Inmarsat said strong demand from governments and aviation customers in the final quarter of 2016 helped core earnings for the year to rise 9.5 percent to $795 million, sending its shares to a two-month high.
Chief Executive Rupert Pearce said a large part of the group’s outperformance in the final quarter was down to a one-off contract from the U.S government.
“It shows that governments are using us for operation deployments, and in particular they like GX,” he said, referring to the company’s new global satellite network.
He said demand from airlines boosted revenue at the end of the year, helping to offset continued weakness from maritime customers, which has long been the largest part of its business.
Inmarsat is building a network with Deutsche Telekom in Europe that will provide high-speed broadband to passengers on short-haul flights.
The satellite company said on Wednesday that BA and Iberia owner International Airlines Group would be the launch customer for the network, which it aims to have in place later this year.
IAG planned to connect more than 300 of its aircraft to the network, allowing customers to browse the internet and stream video, and have 90 percent of its short-haul fleet equipped by early 2019, Inmarsat said.
The satellite group said it expected growth to come from its new networks, but it warned that its markets “continued to be challenging, with sustained pressure on customer expenditure, increasing competition and the arrival of new satellite capacity.”
It said the outlook for the next two years was difficult to predict, though it said it expected revenue of $1.2 billion to $1.3 billion this year, in line with market expectations.
In 2018, it sees revenue increasing to $1.3 billion to $1.5 billion next, an up to 10 percent downgrade to its previous expectations, although the new numbers are in line with analysts’ forecasts.
Chief Financial Officer Tony Bates said the guidance had been lowered because of satellite launch delays and uncertainty over the timing of some airline deals.
Revenue in 2016 rose 4.3 percent to $1.33 billion, the company said.
Shares in Inmarsat were trading up 6.5 percent at 729 pence at 1142 GMT.
(Editing by David Clarke and Jane Merriman)
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