Building for growth in 2021
Jul Jul Jan Jan Full-year
-Sep -Sep -Sep -Sep
TSEK 2020 2019 2020 2019 2019
Revenue 32 56 126 166 231,642
285 979 844 327
Operating -17 2 142 -28 -2 11,419
profit/loss 000 958 247
Adjusted operating -17 2 142 -28 10 23,716
profit/loss* 000 958 050
Profit/loss for -30 26 -48 34 29,230
the period after 180 259 366 677
Earnings per -0,55 0,78 -1,19 1,13 0.93
refer to the write
-down of advances
to Orbital. See
Comments from the CEO
Despite the effect that the pandemic has on our marketing activities it has been an eventful quarter with important events that strengthen our offering for the future. The development of our own upcoming satellite Ovzon 3 is progressing according to plan and we are seeing more and more clearly what opportunities that will open up for us.
Quarterly outcome as expected
Our marketing activities continue to be limited by Covid-19 during the quarter. However, in September we were able to start meeting customers and business partners once again. The trade fairs that are so important to the industry continue to be canceled or postponed.
The turbulent situation in the world economy after the eruption of Covid-19 and the lower six-month contract from the US DoD signed in March means, as we previously communicated, that sales and profitability weakened in the short term. The quarterly outcome was in line with our expectations but lower than last year.
The lower turnover has a direct impact on our gross profit as it means that we have a lower utilization of our leased satellite capacity. The contract with US DoD was renewed at the end of July and runs on a slightly higher level from September, when we expand the service with a steerable antenna on Intel's IS-39 satellite, on which we lease capacity for our service.
New deals for increased capacity and technical progress
To secure additional capacity and coverage in the important Ku30b frequency band, we agreed in August with Intelsat on access to three powerful steerable antennas on the Intelsat 39 (IS-39) and Intelsat 37 (IS-37) satellites. The agreement replaces and expands the previous agreement regarding capacity on IS-39. Through this agreement, we commit to rent capacity for about USD 10 million per year over four years. This new capacity enables us to build a network where, with the controllable antennas, we can offer satellite capacity over virtually the entire world. The agreement with Intelsat is therefore an important step for Ovzon in that it expands our opportunities to serve customers with demanding services with high bandwidth and high availability, and it thus paves the way for our upcoming satellite Ovzon 3.
In October, we entered into an agreement with Hellas-sat, where we will have access to their satellite capacity across large parts of Europe and the Middle East and share revenue from sold capacity. The agreement is like the agreement we have with Hispasat and complements it since it secures capacity for an expanded geography. Through the agreements with Intelsat, we secure capacity similar to the upcoming capacity on Ovzon 3 and through the agreements with Hispasat and Hellasat, we can also offer almost global reach.
In September, a successful demonstration of Ovzon's capabilities was carried out on board a helicopter. During flight with a Blackhawk helicopter in heavy rain, transmission speeds of up to 17 Mbps were recorded on both reception and transmission, with the possibility of transmitting HD video and video conferencing on board the helicopter. The transfer of this bandwidth through the rotor of a helicopter is unparalleled and will have a major impact on the use of our technology on both manned and unmanned platforms in the future.
Ovzon 3 on schedule
Ovzon 3, which is now under production at our partner Maxar in the US, is planned to be launched during the fourth quarter of 2021. The satellite construction is progressing according to plan. With Ovzon 3, our capacity will be multiplied, and the satellite gives us the opportunity to offer even better performance and expanded functionality. Ovzon 3 is the first of a number of planned satellites for global reach for our service based on our own satellites.
We are preparing for growth in 2021
External factors continue to be challenging and we do not expect any improvement in 2020. This affects our ability to take new business and the turnover during the final quarter of 2020 will thus be in line with the turnover during the second and third quarters, which means that sales for 2020 will be lower than for 2019.
We continue to see strong signs that the market for satellite communications services, which require high mobility and performance, will continue to develop positively. Ovzon has a strong balance sheet and an excellent position to capitalize on the very large revenue opportunity that Ovzon 3 entails. We expect to contract new customers during the year who will also be interested in capacity at Ovzon 3, and we are preparing to be in a position to grow in 2021.
Magnus René, CEO
FNCA Sweden AB, +46(0)8 528 003
This information is inside information that Ovzon is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 08.00 CET on October 21, 2020.