Interim report January-June
- Sales of SEK 2,624m (3,566) with organic growth of -13% reflecting the impact of COVID-19
- Viaplay paying subscribers up 206k QoQ and 605k YoY to 2,716k following high intake and low churn levels. FY20 intake target recently raised to 600k
- Viaplay sales down 4% due to proactive and temporary reduction in sports package prices
- Operating income of SEK 156m (432) before associated company income and IAC
- Associated company income of SEK 54m (2) including NENT Group’s 50% share in Allente’s net income since beginning of May
- Operating income before IAC of SEK 210m (434) when excluding SEK 2,383m (0) non-cash capital gain arising from Viasat Consumer merger with Canal Digital
- Adjusted net income for continuing operations of SEK 148m (333) with adjusted EPS of SEK 2.20 (4.94)
- Studios operations that are for sale are reported as discontinued operations, with historical periods restated accordingly
|Q2 2020||Q2 2019||H1 2020||H1 2019||Full year 2019|
|Operating income before associated companies and IAC||156||432||375||716||1,441|
|Associated companies income||54||2||54||2||5|
|Operating income before IAC||210||434||429||718||1,445|
|Items affecting comparability (IAC)1)||2,383||-||2,383||-56||-755|
|Net income, continuing operations||2,517||331||2,673||504||538|
|Net income, discontinued operations2)||-3||17||-2||11||52|
|Net income, total operations||2,515||348||2,671||515||590|
|Basic earnings per share (SEK)||37.34||5.17||39.67||7.66||8.77|
|Adjusted net income from continuing operations3)||148||333||305||551||1,145|
|Adjusted earnings per share from continuing operations (SEK) 3)||2.20||4.94||4.53||8.20||17.02|
President & CEO’s comments
Q2 was an unprecedented quarter in many ways. Not only have we been dealing with the effects of the COVID-19 pandemic but we have also closed the merger between Viasat Consumer and Canal Digital, launched Viaplay in Iceland, announced the expansion of Viaplay to the Baltics, teamed up with Elisa in Finland, raised our Viaplay subscriber intake target again, delivered on our cost cutting programme, partially refinanced ourselves and launched an updated reporting structure. We will come out of this crisis stronger and even better positioned. The credit for this goes to the fantastic dedication and focus of our teams during these challenging times.
Our organic sales were down 13% due to the various impacts of COVID-19 on our subscription and advertising revenues. Viaplay’s exceptional subscriber intake continued into Q2 with 206k paying subscribers added (QoQ). Viaplay revenues were down 4% due to the temporary price reductions that we proactively implemented at an early stage of the crisis for our sports customers. Now that the majority of sports have resumed, prices are back to normal and Viaplay is performing very well.
We ended the quarter with over 2.7m Viaplay subscribers, up 605k or 29% YoY. Streamed minutes, excluding sports, were up 42% YoY in Q2, while streamed minutes of sport were up 10% in June and 116% so far in July. We recently raised our FY20 Viaplay subscriber intake target from 400k to 600k to reflect this very positive momentum.
Other subscription revenues were down 34% due to the deconsolidation of Viasat Consumer, as well as the temporary sports package price reductions by third party distribution partners.
Advertising sales were down 30% as expected, but we have seen a substantial improvement in July. While still early days, we expect our advertising sales to be down substantially less in Q3 than in Q2.
The sales process for the non-core part of our Studios business is proceeding according to plan. Revenues for the continuing studios businesses, which will primarily provide content for Viaplay, were down 57% as all large-scale productions were postponed to H2 or early 2021. We still expect to premiere approximately 30 Viaplay originals in 2020, and up to 40 in 2021, if the gradual return to full production capacity continues.
Our EBIT before associated company income and IAC was down significantly, due to the lower advertising and sports subscription revenues, as well as the deconsolidation of Viasat Consumer. We have taken the remaining costs for the current football seasons that have restarted, while costs for other sports events that had not restarted in Q2 will be taken from Q3. The savings from the 2019 transformation and 2020 COVID-19 initiatives amounted to SEK 300m in the quarter, and we continue to expect savings of over SEK 900m for the full year.
The merger to create Allente gave rise to a number of effects in our results, including a substantial capital gain and our share of Allente’s net result after restructuring charges. On an underlying basis, the business continued to perform as expected, and is focused on delivering the SEK 650m of cost synergies, as well as the upselling of Viaplay to the Canal Digital subscriber base.
Our overall performance in Q2 has demonstrated the resilience of both our products and people, as well as the relevance of our streaming strategy. While the impact of the pandemic is far from over, our priority is to deliver the best possible customer experience and this is reflected in our content being more popular than ever. Our technology platform has again proven its agility through this volatile period and, following the successful launch in Iceland and the announcement of our expansion to the Baltics, our vision is now to scale Viaplay even further, with the addition of 15+ markets in the next 5+ years.
President & CEO
NENT Group 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) 8 506 921 80|
|UK||+44 (0) 8 445 718 892|
|US||+1 6 315 107 495|
The access pin code for the call is 8594032.
To listen to the conference call online and for further information, please visit www.nentgroup.com
Notes to editors
Nordic Entertainment Group AB (publ) (NENT Group) is the Nordic region’s leading entertainment provider. We entertain millions of people every day with our streaming services, TV channels and radio stations, and our production companies create content that is experienced around the world. We make life more entertaining by telling stories, touching lives and expanding worlds – from live sports, movies and series to music and original shows. Headquartered in Stockholm, NENT Group is listed on Nasdaq Stockholm (‘NENT A’ and ‘NENT B’). This information is information that Nordic Entertainment Group AB (publ) (NENT Group) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 22 July 2020.