1&1 Drillisch AG - Successful Start to the Year
- Number of customer contracts rises by 180,000 to 13.72 million
- Service revenues increase by 3.5% to EUR730.4 million, adjusted increase 4.8%
- EBITDA grows by 1.8% to EUR168.5 million, adjusted increase 9.7%
- Confirmation of forecast 2019
Maintal, 15 May 2019 - 1&1 Drillisch AG (ISIN DE 0005545503) continued on its course in the first quarter of 2019. The Company was able to increase further the number of customers, the revenues and the operating profit figures.
In comparison with Q4 2018, the number of customer contracts across all customer groups increased by 180,000 to 13.72 million contracts (Q4 2018: 13.54 million). In the mobile internet business, an additional 170,000 customer contracts were acquired, increasing the number of contracts to 9.37 million (Q4 2018: 9.20 million). Broadband lines added 10,000 contracts and rose to 4.35 million (Q4 2018: 4.34 million).
During Q1 2019, total revenues rose in comparison with Q1 2018 by 0.9% from EUR904.3 million to EUR912.1 million. The high-margin service revenues increased as planned by 3.5% to EUR730.4 million (Q1 2018: EUR705.7 million). These earnings are the subject of our primary focus because they are sustainable and the determining factor for our profit.
On the other hand, the low-margin Other sales - essentially from the realisation of hardware sales brought forward (in particular from investments in smartphones that will be reimbursed by the customers over the minimum contract term in the form of higher package prices) - declined by EUR16.9 million from EUR198.6 million in the previous year to EUR181.7 million in Q1 2019. Hardware sales were below expectations of the company, but this business fluctuates according to season and is dependent on the attractiveness of new devices and the model cycles of the hardware manufacturers. This effect may therefore reverse in the coming quarters. Even if this should not happen, however, there will be no considerable impact on our EBITDA development.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 1.8% from EUR165.5 million to EUR168.5 million. This includes positive effects from the first-time application of IFRS 16 regulations in the amount of EUR1.1 million as well as one-time effects from expenses in connection with integration projects in the amount of EUR -2.1 million (previous year: EUR -5.0 million). The only slight increase is mainly due to the fact that the time-limited adjustment mechanism of an advance price agreement was not extended again but expired at the end of 2018. This temporarily led to additional costs in the amount of about EUR17.5 million during Q1 2019. Contrary original expectations of 1&1 Drillisch, no decision has yet been taken regarding a replacement or compensation for the expired arrangement. However, the corresponding wholesale prices are the subject of arbitration proceedings, in the course of which there will be a binding expert decision on the type and amount of sustainable price adjustment within a few months of the end of the 5G spectrum auction. From this decision of the assessor, the management expects retroactively lower advanced prices.
Consolidated EBIT (earnings before interest and taxes) rose by 1.4% from EUR127.0 million to EUR128.8 million.
Ralph Dommermuth, CEO of 1&1 Drillisch, summarizes the first quarter's performance: "Our most important performance indicators developed well during Q1 2019. High-margin service revenue increased by 3.5% year-on-year. Adjusted for the effects of the changed capacity split with a focus on Telefónica wholesale services, the increase even amounted to 4.8%. EBITDA adjusted for IFRS 16 effects, one-offs for integration projects and the absence of a price adjustment mechanism increased by 9.7%."
Performance indicators pursuant to IFRS - comparison Q1 2018 v Q1 2019
| in EURm | Q1 2018 | Q1 2019 | Change |
| Revenues | 904.3 | 912.1 | + 0.9% |
| Service revenues | 705.7 | 730.4 | + 3.5% |
| Adjusted Service revenues excluding effects from changed capacity split with focus on mobile contracts on the basis of Telefónica-wholesale services | 706.9 | 740.6 | + 4.8% |
| EBITDA | 165.5 | 168.5 | + 1.8% |
| Adjusted EBITDA excluding effects from IFRS 16, one-offs from integration projects and the discontinuation of the temporary price adjustment mechanism of a prepayment agreement | 170.5 | 187.0 | + 9.7% |
| EBIT excluding ppa write-offs | 155.6 | 157.4 | + 1.2% |
| EBIT | 127.0 | 128.8 | + 1.4% |
| Profit per share in EUR excluding ppa write-offs | 0.59 | 0.62 | + 4.6% |
| Profit per share in EUR | 0.48 | 0.50 | + 5.0% |
| Customer contracts in current product lines (million) | 12.84 | 13.72 | + 6.9% |
| of which mobile internet | 8.54 | 9.37 | + 9.7% |
| of which broadband (VDSL, ADSL, FTTH) | 4.30 | 4.35 | + 1.2% |
1&1 Drillisch substantiates its forecast for the 2019 financial year to the effect that high-margin service revenues should continue to grow by around 4% (2018: EUR2,882.3 million) while the further development of low-margin hardware sales remains to be seen. The company expects EBITDA to continue to grow by approximately 10% (2018: EUR721.9 million). Also unchanged, 1&1 Drillisch plans to further substantiate its EBITDA forecast after completion of the aforementioned expert opinion process.
The interim report will become available on the Company's home page on 15 May 2019.
https://www.1und1-drillisch.de/investor-relations/reports
Disclaimer: This report contains statements regarding the future which are based on the current assumptions and projections of the 1&1 Drillisch AG management. Various risks, uncertainties and other factors, both known and unknown, can cause actual developments, especially in the results, financial position, and the business of our Company, to deviate substantially from the projections about the future as they are shown here. The Company does not undertake any obligation to update such future-oriented statements and to adapt them to future events or developments.