Inmarsat profits hit by US budget cuts
May 2, 2013
UK based Inmarsat said it had been hit by US government budget cuts in the first quarter, causing earnings to fall short of expectations.
The company, which provides communications to shipping, aircraft and remote locations worldwide, said it would respond by cutting costs, both for its US government business and across the group.
Inmarsat’s US operations, which also include private sector customers, contributed two-fifths of group revenue last year.
“In our US Government business unit, we have seen a sudden and pronounced deterioration in both demand and profitability, in each case principally related to US budget cuts,” Chief Executive Rupert Pearce said.
Chief Financial Officer Rick Medlock said about $7 million of revenue in the group’s managed network services business had been lost in the quarter, most of which would have fallen through to the bottom line. We are expecting this to continue for the foreseeable future. We will take cost action against this, and we expect the margin hit to be ameliorated as we go through the year.”
The group posted core profit, excluding the impact of a failed US airwaves deal, of $154.2 million, down from $157.7 million a year ago and short of the $156.9 million average forecast from analysts in a poll supplied by the company.
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