Inmarsat Sees Rough Sea Ahead
The satellite communications group Inmarsat plc cautions that with the slowdown in the global economy hitting shipping, satellite communications industry faces rough weather, according to a report in Reuters.
The British company, which provides data and voice connections to shipping, warned that tough trading was set to persist in its maritime and government markets this year.
"We are seeing modest growing headwinds in terms of global trade slowdown and increased scrappage and lay outs," Chief Executive Rupert Pearce said.
The capital expenditure forecast is more than analysts expected, and came as Inmarsat said it had revenues of $1.27 billion in 2015, similar levels to 2014. Its revenues from maritime services were $593 million in 2015, down $2.4 million from the year before.
“Maritime revenues were little changed, with strong growth in our two key products, FleetBroadband and XpressLink, continuing to be offset by decline in our non-core legacy product suite,” said Pearce.
Inmarsat would spend $500 million to $600 million on capital expenditure in 2016 and in each of the following two years, about $100 million more than analysts had pencilled in. This investment of up to $1.8 billion, includes spending on a fourth Inmarsat-5 (I-5) satellite and two Inmarsat-6 (I-6) satellites.
The company said the medium term outlook remained "encouraging, with the global demand for high speed mobile data communications continuing to grow", but the underlying trading environment in 2016 was expected to be broadly similar to that in 2015, when spending by its government customers was weak.
Rupert says: "It's not a benign operating environment out there, but we are well positioned. We grew market share in the maritime sector over 2015, showing the strength of the tools we are playing with, it's just a difficult environment."
