Release Date: August 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cyfrowy Polsat SA (WAR:CPS, Financial) reported a 2.9% growth in retail revenue, driven by increases in ARPU across B2C, B2B, and Prepaid segments.
- The company expanded its Fixed Broadband Internet Access services coverage by almost 50%, reaching over 10 million households.
- Cyfrowy Polsat SA secured exclusive broadcasting rights for UEFA Europa League and UEFA Conference League, enhancing its media content offerings.
- The Green Energy segment saw significant progress with the commissioning of the Przyrow wind farm, increasing wind generation capacity to 150 megawatts.
- The company achieved a stable viewership share of 22% in the commercial group, maintaining a strong position in the TV advertising market with a 28% share.
Negative Points
- The company faces inflationary pressures on technical costs, content production, and wages, which could impact future profitability.
- Net debt-to-EBITDA ratio, excluding project financing, was 3.3 times, with expectations of an increase due to higher CapEx in the Green Energy segment.
- The Media segment experienced higher content and marketing costs, which pressured EBITDA despite stable viewership.
- Interest payments remain high, continuing to exert pressure on free cash flow generation.
- The B2C and B2B Services segment faced revenue pressure from MTR cuts and lower equipment sales, despite maintaining high margins.
Q & A Highlights
Q: What is the outlook for expenses in the second half of 2024, and in which areas can we expect inflationary pressure?
A: Katarzyna Ostap-Tomann, CFO, mentioned that they are cautious about costs and aim to keep them under control. However, inflationary pressures are expected in technical costs, content production costs, and wages. The regulatory minimum wage also adds pressure, affecting costs like security and cleaning, where minimum wage workers are employed.
Q: What is the strategy for hedging electricity generation, especially in the renewable energy side?
A: Maciej Stec, Vice President, explained that they sell energy based on PPAs or long-term contracts, like the 10-year contract with Google Cloud for the Przyrow wind farm. They do not hedge energy but sell it through various business models, including spot sales and long-term contracts.
Q: How do you manage the balance between stable and unstable energy sources?
A: Maciej Stec stated that their energy strategy involves balancing stable sources like biomass with unstable ones like wind and solar. This allows them to sell energy in various models, ensuring they can deliver a consistent amount of energy and achieve higher prices through long-term contracts.
Q: Are you fully hedged in your energy sales, or do you have a certain hedging level?
A: Maciej Stec clarified that they balance energy internally, allowing them to generate higher prices. They are flexible and adjust based on market conditions, using their trading company, PAK-VOLT, to optimize returns on investment.
Q: Can you provide more details on your energy trading strategy?
A: Maciej Stec elaborated that their strategy involves predicting biomass, solar, and wind prices to balance energy sales effectively. This approach allows them to earn more and make their return on investment more attractive.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
