SES Says Financial Crisis Could Work To Its Advantage

PARIS – The world’s largest commercial satellite-fleet operator, SES of Luxembourg, said Oct. 27 that the financial crisis now sweeping the world is having little or no impact on the company’s business and ultimately may work to its advantage.

SES still expects its revenues to grow by 5 percent per year, on average, through 2011, and even more if the U.S. dollar maintains its recent strength against the euro. The company’s gross profit margins for its core satellite capacity sales business will remain around 82 percent during the period, SES forecasts.

In Oct. 27 conference calls with journalists and investors, SES Chairman Romain Bausch said the ongoing credit crisis may work to the company’s benefit.

Bausch said the U.S. government, a major customer of SES’s Americom and New Skies divisions, will be more likely to purchase capacity on commercial satellites than to build its own high-cost spacecraft at a time of government belt-tightening.

Second, Bausch said, SES’s modest debt level compared to several of its competitors could improve the company’s competitive position to the extent the more heavily indebted fleet operators, struggling to finance their debt, will not be able to take advantage of growth opportunities.

For the nine months ending Sept. 30, SES reported revenue of 1.186 billion euros ($2.4 billion), a 7.1 percent increase over the same period a year earlier when foreign-exchange fluctuations are not taken into account.

The company’s fleet had a 77.6 percent fill rate.

SES has 10 satellites under construction and scheduled for launch between now and the end of 2011, and an 11th satellite that, for the moment, is intended to be a ground spare.

SES Chief Financial Officer Mark Rigolle said SES is filing insurance claims following partial power failures on its AMC-4 and AMC-16 satellites. The company recently reduced the capacity on its AMC-6 satellite as well because of the same problem.

All three satellites are A2100 models built by Lockheed Martin Commercial Space Systems of Newtown, Pa. Lockheed Martin has said the likely cause of the failure is electrostatic discharge, and that the satellite line was modified and, since 2006, has not witnessed the problem.

Bausch said SES may move up the date of an expected order with Orbital Sciences Corp. of Dulles, Va., to provide in-orbit replacement for the affected satellites. SES has contracted for three of the five nearly identical Orbital-built spacecraft that were part of a contract signed in 2007.