Sky expected to post rise in interim profits despite competition from BT

Sky expected to post rise in interim profits despite competition from BT

The City will look to see if broadcaster Sky can continue to add customers under increasing competition from rival BT, and will find out whether Dixons Carphone was a retail winner or loser over Christmas.

Pay TV giant Sky is expected to shrug off the increasing threat of rival BT and notch up further growth when it reports its half-year results on Friday.

Analysts at Numis expect the broadcaster to post a rise in interim pre-tax profits of 6% to £620 million compared to a year ago, following on from strong trading in October that saw it record its best first-quarter UK customer growth for four years.

The group said then it added 77,000 customers in the three months to the end of September across the UK and Ireland, up 50% on a year earlier.

Sky, which serves more than 20 million customers group-wide following the acquisition of businesses in Italy and Germany, hailed a ”strong start to the year” as it posted a better-than-expected 10% leap in overall group earnings to £375 million.

Numis analyst Paul Richards said: “We forecast another good period of customer growth, following on from robust first quarter results in October.”

He added that Sky offers “defensive growth” in a competitive media market.

The group said broadband was its star performer in October, with a 77% surge in new customers, up 133,000 on a year earlier.

Popular television series such as True Detective, as well as box set offerings including Sons Of Anarchy, Entourage and True Blood, helped viewing figures rise 70% year-on-year for Sky Atlantic in the UK and Ireland. Sky Sports viewing rose 3%, the broadcaster added.

Group performance was driven by the UK, while earnings were held flat in Germany and Austria and tumbled by 24% in Italy.

The firm’s growth came despite the launch of BT’s Champions League coverage, with the group seeking to lure customers away from Sky.

BT kept its expansion plans on track, when earlier this month the Competition and Markets Authority cleared its £12.5 billion buyout of mobile phone firm EE.

The deal hands BT an enlarged group that will have around 35 million mobile, broadband, and TV customers.

Electricals retailer Dixons Carphone is expected to be one of the winners at Christmas when the group updates on trading on Tuesday.

Analysts at Numis expect the firm – created following the £3.9 billion merger of Dixons and Carphone Warehouse in the summer of 2014 – to post like-for-like sales up by 4%, with strong same store comparatives up by 8% a year ago.

Numis said the retailer “is expected to have traded solidly over the peak season”.

The broker added it expects sales to grow at the group as a result of technology innovations and the continued take up of 4G mobile services.

Last month Dixons Carphone revealed Black Friday was the strongest trading day in its history as it said half-year profits surged by nearly a quarter.

The group hailed the one-day shopping bonanza as a ”great start” to the Christmas season after it increased the number of Black Friday promotional deals by 30% compared to last year.

Dixons Carphone posted a 23% jump in group underlying pre-tax profits to £121 million in the six months to the end of October on the back of stronger sales of white goods and TVs, offsetting a fall in demand for tablets and PCs.

In the UK, it said earnings over the half-year period jumped 31% to £101 million, while like-for-like sales lifted 7%.

Prospects at Dixons Carphone contrast with Argos owner Home Retail, which earlier this month warned over profits after it said the chain suffered falling sales amid ”mixed” trading over Christmas.

Home Retail – which agreed a £340 million deal to sell its DIY arm Homebase to Australian conglomerate Wesfarmers this month and rejected a takeover approach for the wider business from Sainsbury’s in November – posted a 2.2% fall in sales at established Argos stores for the 18 weeks to January 2.

The group said trading at Argos was ”mixed” as it was hit by uneven trading over the run-up to Christmas caused by the Black Friday promotional day in late November, as well as a slump in the number of shoppers on the high street.

Argos continued to see a fall in sales of electrical products, with tablets, video gaming and white goods the worst affected.

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