Sky shares rise slightly after first-half profit doubles

<p>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 […]</p>

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).


sky historic 4th Feb 2015 


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.


SKY post half year DFT 4TH FEB 2015


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.




Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.