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Hungarian Telekom’s management has raised its annual profit target in view of the company’s second quarter results, which have exceeded market expectations, reports Világgazdaság.
Hungarian Telekom’s net profit grew by 102 percent to nearly HUF 23.7 billion (EUR 61.2 million) in the second quarter, while its revenues increased by 14 percent to slightly above HUF 208 billion (EUR 537 million) and EBITDA (earnings before interest, taxes, depreciation, and amortization) by 31 percent to nearly HUF 76 billion (EUR 196.3 million) compared to the same period last year, the company said after the stock market closed on Wednesday. The Hungarian market leader in telecommunications thus beat the analyst consensus on all major lines.
The group’s revenues were driven by continued strong demand for mobile data and fixed broadband services, as well as the positive impact of the inflation-linked tariff adjustment introduced in Hungary.
Mobile revenues increased by 15.2 percent to HUF 121.3 billion (EUR 313.3 million), driven by growth in mobile data and voice retail revenues. Fixed line revenues grew by 14.8 percent to HUF 67.1 billion (EUR 173.3 million), mainly driven by higher broadband,TV revenues, and the inflation-linked adjustment to Hungarian subscription fees.
Moreover, in this quarter, system integration and IT revenues also grew by 5.1 percent to HUF 19.7 billion (EUR 50.9 million), boosted by high value projects in Hungary.
Indirect costs, meanwhile, rose by only 3.6 percent in the quarter, as the different timing of the accounting of the telecoms surcharge offset the rise in other costs. However, for the first half as a whole, they jumped by 22 percent on an annual basis as electricity costs quadrupled, Hungarian wage costs rose by an average of seven percent, and inflationary pressures on other items increased.
As a result, EBITDA increased by 31 percent and EBITDA AL (earnings before interest, taxes, depreciation, and amortization after leases) by 33.5 percent in the second quarter, as an 18.7 percent improvement in gross margin offset the increase in indirect costs.
Net profit attributable to equity holders of the company rose to HUF 22.3 billion (EUR 57.6 million) in the quarter, while total net profit increased to nearly HUF 23.7 billion (EUR 61.2 million), reflecting the deterioration in financial performance, slightly offsetting the EBITDA increase. Returning to the financial result, the loss increased from HUF 6.5 billion (EUR 16.8 million) last year to HUF 12 billion (EUR 30.9 million), driven by higher interest costs.
In view of the better-than-expected quarterly results, management has revised its annual net profit target and now expects double-digit growth instead of moderate, while revenue and EBITDA AL growth should remain in the range of five to ten percent.
Management also confirmed its annual free cash flow forecast of HUF 60 billion (EUR 154.9 million).
Via Világgazdaság, Featured image via azevirodaja.hu
