Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) published a profit warning this morning, stating that it will report a profit for 2018 some 15% lower than in its guidance. The company said that the lower profit was mainly due to one-time events, and not to a decline in its regular business.
At the same time, Bezeq said that its free cash flow would be higher by 12% than indicated by its guidance. The company's EBITDA for 2018 is not expected to be materially different from its guidance.
The update from Bezeq still does not include the effect of employee severance and the fall in value of its subsidiaries. The original guidance was for a net profit of NIS 1 billion. Bezeq had already announced that profit would shrink to NIS 464 million because of its streamlining plan, which includes early retirement by employees. A reduction of 15% from the original guidance plus the NIS 464 million reduction because of the early retirement program means that net profit is now forecast to be NIS 386 million, but the fall in value of Bezeq's subsidiaries - particularly satellite broadcaster Yes - will mean that net profit will shrink further.
Free cash flow was forecast to be NIS 1.5 billion, but the updated forecast is for NIS 1.68 million, while EBITDA is forecast to total NIS 3.9 billion.
Bezeq's share price is actually up 1.55% on teh Tel Aviv Stock Exchange this morning, while the share price of parent company B Communications is up 3.66%.
Published by Globes, Israel business news - en.globes.co.il - on February 24, 2019
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