Magyar Telekom Q1 profit jumps on one-offs, improved margin

Revenue fell 7.6% to HUF 145.1 bln, mainly due to MTelʼs exit from the retail gas business and the transfer of its corporate energy business into a joint venture. 

The telco noted that revenue from its core business was up 1.8% during the period.

The profit-and-loss statement shows direct cost of sales fell at an even sharper rate than revenue, dropping 21.4% to HUF 45.4 bln, lifting gross margin 0.4% to HUF 99.6 bln.

EBITDA was up 13.6% at HUF 48.2 bln, supported by HUF 6.5 bln in “other operating income”.

MTel noted a one-off gain of HUF 5.1 bln on the sale of one of its main office buildings and its media company Origo.

Operating profit was up 45.6% at HUF 21.6 bln.

After-tax profit jumped 245.1% to HUF 11.5 bln, over the HUF 8.1 bln estimate by analysts polled by portfolio.hu

Earnings per share stood at HUF 10.3.

CAPEX as a proportion of sales edged up two-tenths of a percentage point to 8%.

MTelʼs gearing ratio fell from 42.9% to 41.8% in the twelve months to the end of March. CEO Christopher Mattheisen noted that the level was “approaching our target range of 30%-40%”.

Guidance included in the report puts revenue at HUF 580 bln-590 bln in 2016 and HUF 585-595 bln in 2017. EBITA is targeted at HUF 187 bln-191 bln for 2016 and HUF 189 bln-193 bln for 2017. MTel sees CAPEX falling 10% year-on-year in both years, though it excludes spectrum acquisitions and annual frequency fee capitalization from the figures.

MTel targets payment of a HUF 25-per-share dividend on 2016 earnings.