Shares in Inmarsat dived yesterday despite soaring profits in the first half of the year, as it warned that the slowdown in its maritime business would drag on for longer than it had initially expected.
The satellite operator reported a 68 per cent jump in profits to $254.8m in the six months to the end of June, while revenues rose a fifth to $682.9m. Both beat analyst forecasts.
Yet, almost 20 per cent of the company's value was wiped off yesterday as the shares tumbled to 391.3p – even on a torrid day for the markets, the company performed twice as badly as the next largest faller.
Andrew Sukawaty, chairman and chief executive of Inmarsat, said that a co-operation deal with wireless broadband group LightSquared had driven record revenue growth "and is offsetting a slowdown in the growth of our Inmarsat Global MSS revenue". The maritime business has been hit by customers moving onto its cheaper FleetBroadband service, a lower use of voice calls and some users moving to rival providers.
He said that a return to revenue growth was "only a matter of time," but cautioned: "We expect near-term factors will constrain growth for longer than previously anticipated."
Yesterday's statement added that the deal with LightSquare would see it meet full-year profits. The company boosted its interim dividend by 10 per cent and launched a $250m share repurchase programme because of the strength of its balance sheet, Mr Sukawaty added.
Broker Liberum Capital said the fall in share price was "overdone" saying it "materially undervalues" the core business.