Sky shares rise slightly after first half profit doubles

Sky Plc. more than doubled its profits in its last half-year.

Net profit in the six months ending on 31st December rose to £1.09bn from £411m in the same half a year earlier.

These are Sky’s first earnings since the UK-based satellite, cable, broadband and telephone services firm last summer bought out German and Italian subsidiaries, combined them and formed the largest pay-TV broadcaster in Europe.

It said continuing strong pay-TV demand in the UK and a record jump in customers in Germany helped lift operating profit 16% to £675m and edge adjusted revenues 5% higher to £5.60bn.

204,000 new customers were added in Britain and Ireland, the highest growth in nine years.

Sky posted record growth in Germany and the best growth in Italy in 12 quarters, helped by fewer customers leaving the platform.

 Growth concerns

These results may go some way to assuage City concerns that Sky’s growth rates are slowing and margins retreating.

In particular, full-year dividend yields look to have peaked from the £3.868 per share reported at the end of 2009 to the £3.539 set to be paid out for 2014.

At the same time more than 27% was eroded off its net income margin which was reported at 11.33% for the last full year ending in June 2014.

This may help explain the welcoming, albeit guarded response by the market to this morning’s results, with the shares opening 3% higher before retreating down to a gain of just 1.5%.

Investors are quite clearly signalling that the shares don’t currently justify trade above current levels, which are close to long-term peaks (AKA resistance).

Traders of City Index’s Daily Funded Trade in Sky also seem mindful on a half-hourly basis.

Given that the attached MACD / Zero Cross signal follows Moving Average Convergence Divergence principles to the letter, it does not take into account periods when trades are visibly ‘overbought’ as in the chart below.

On the other hand, traders do seem to be responding to the MACD and signal line reaching their upper limits.

At the same time, all elements of another attached indicator, the Volatility Quality Index, are currently elevated, suggesting above-average risk of sharp short-term moves.