Central European Media Enterprises Ltd. (CME) today announced financial results for the three and six months ended June 30, 2019.

Operational and financial highlights:
• TV advertising revenues in the quarter were broadly flat at actual rates, but increased 7% at constant rates.
• Carriage fees and subscription revenues in the quarter increased 3% at actual rates and 11% at constant rates.
• Costs charged in arriving at OIBDA in the quarter decreased 9% at actual rates and 3% at constant rates.
• OIBDA margin in the quarter increased by 650 basis points to 40%.
• Cash generated from continuing operating activities in the first half of 2019 increased 76% at actual rates to US$ 140.3 million.
• Unlevered free cash flow in the first half of 2019 increased 52% at actual rates to US$ 146.0 million.
• CME repaid a total of EUR 100 million of debt in the first half of 2019 using cash generated by the business.
• Net leverage ratio declined to 2.6x at the end of June, down from 3.5x at the start of the year.

Michael Del Nin, Co-Chief Executive Officer, commented: "We could not have hoped for a stronger set of results this quarter. This unique portfolio of assets has delivered another impressive performance, once again exceeding our expectations and demonstrating the extraordinary growth potential of our businesses. In fact, in terms of constant currency revenue and OIBDA growth, this was the company’s strongest Q2 in four years. OIBDA margins expanded in every one of our country operations and reached a remarkable 40% across the group. But even more impressive was the greater than 50% surge in cash generation so far this year, which allowed us to further reduce our debt, bringing total repayments in 2019 to EUR 100 million and pushing our borrowing cost to its lowest level ever."

Christoph Mainusch, Co-Chief Executive Officer, added: "We were selective and strategic when designing our program grids so costs were lower overall while the main channel in each territory increased its audience share in prime time this year, and we increased the gap between us and our closest commercial competitor in prime time audience share in four markets. The TV ad market in the Czech Republic saw its strongest first half of the year since 2015 and spending on advertising rebounded in Romania during the second quarter. Year-to-date, we have seen double digit growth in carriage fees and subscription revenues in three of our segments."
In this release we refer to several non-GAAP financial measures, including OIBDA, OIBDA margin, free cash flow, unleveled free cash flow and constant currency percentage movements. Please see “Non-GAAP Financial Measures” below for additional information, including definitions and reconciliations to US GAAP financial measures.

CME’s operating income before depreciation and amortization (OIBDA) increased to $73.3 million, above the average estimate of $67.3 million in a Reuters poll. Its OIBDA margin grew to 39.9% from 33.4% a year earlier.
Revenue was in line with expectations at $183.6 million, up 7.9% at constant exchange rates in CME’s five central and eastern European markets due to growth in advertising markets but flat in actual terms.
CME said the quarterly growth at constant rates was its best in four years. It forecasts OIBDA to grow 12-14% in 2019 at constant rates.

As CME, majority owned by U.S. group AT&T, has grown in recent years, it has reduced a debt pile that once topped $1 billion to a net $665 million at the end of the first quarter.

The falling leverage levels have opened the possibility of the company paying its first dividend. However, management appears to be in no rush to return funds to shareholders, especially after launching a strategic review in March that could mean the sale of part or all of the company.

Management has not commented on specific options in the process since its launch.