Modern Times Jumps Most in Six Months After Raising Dividend

Modern Times Group AB, Sweden’s largest private broadcaster, rose the most since July in Stockholm trading after beating analyst estimates for sales and increasing its dividend.

Modern Times rose as much as 25.90 kronor or 7.5 percent to 372 kronor, the biggest intraday jump since July 22. It stood at 359.80 kronor as of 3:59 p.m. in the Swedish capital.

“The numbers were a lot better than expected and they also had relatively OK profitability in emerging markets, which was the biggest worry in the third quarter,” said Alexander Wisch, a London-based equity analyst at Standard & Poor’s, who recommends buying the shares. “In one quarter they’ve reversed most of the advertising slump in eastern Europe.”

Sales gained 6 percent to 4.08 billion kronor ($562 million) from 3.84 billion kronor a year earlier, the Stockholm-based company said in a statement today. Analysts had predicted sales of 3.94 billion kronor, the average of nine estimates compiled by Bloomberg.

“We may raise our forecasts about 5 percent for profitability” at level of earnings before interest and tax this year, said Rasmus Engberg, an analyst with Handelsbanken Capital Markets in Stockholm, who also recommends buying the shares. He’s contemplating bigger revisions to his estimates for 2011, he said.

Higher Dividend

The Stockholm-based company reported an operating loss of 2.63 billion kronor, after a 3.35 billion-krona charge on writedowns for a Bulgarian television channel acquired in 2008 and other eastern European assets. Analysts had estimated the operating loss at 2.9 billion kronor. The net loss was 2.86 billion kronor compared with net income of 494 million kronor a year earlier.

The board proposed raising the dividend to 5.50 kronor from 5 kronor last year.

“I don’t think there are many companies which have grown sales, increased profits and proposed an even higher dividend after the worst year in media history probably, so it shows the company is pretty stable,” Chief Executive Officer Hans-Holger Albrecht said in an interview.

All of the company’s markets are expected to grow this year, Albrecht said. The company plans more small acquisitions and will invest further in pay TV in eastern Europe, as well as Africa, where it has an ad-supported TV channel in Ghana, he said.

Modern Times bought 50 percent of Raduga Holdings SA to add Russian satellite pay-TV subscribers, it said this month. The Russian market of 50 million TV households currently has the lowest pay-TV penetration in Europe and satellite will be a dominant delivery mechanism, Albrecht said.

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