Jefferies Comments On Central European Media Following Quarterly Results Release

Central European Media CETV reported better than expected Q1 revenues this morning but costs increased faster than anticipated and group OIBDA margin of 8.2% was below Jefferies expectation of 9.2% and consensus of 9.0%. Overall, the results demonstrated improving trends in all markets, with Romania the only exception, but much of the Czech growth can be attributed to currency tailwinds. Broadcasting revenues of $157.5m were 5% ahead of Jefferies expectations driven mainly by better than expected performance in Bulgaria which was $5.3m ahead of Jefferies expectation of $14m. Czech, Slovakian, and Slovenian revenues were all in-line with expectations while Romania and Croatia were 4.3% and 6.7% better than estimates. Jefferies estimates 4.9% of the 6.3% increase in Czech broadcasting revenues can be attributed to currency effects leaving underlying growth of 1.4%. Slovakia and Slovenia also benefited from a 1.1% currency tailwind, while Romania, Croatia, and Bulgaria performed better than expectations in spite of appreciating currencies. Jefferies has a $24 PT and Hold rating on CETV CETV closed Tuesday at $20.88