Satellite firm Inmarsat says global slowdown hitting shipping

(Adds CEO comments, shares)

By Paul Sandle

LONDON, March 3 (Reuters) - Inmarsat (Other OTC: IMASF - news) warned that tough trading was set to persist in its maritime and government markets this year, with the slowdown in the global economy hitting shipping, the engine for cash flow in the satellite communications group.

Inmarsat said it would spend $500 million to $600 million on capital expenditure in 2016 and in each of the following two years, about $100 million more than analysts had pencilled in.

The news sent shares in the British FTSE 100 company down 5 percent in early deals on Thursday.

"We are seeing modest growing headwinds in terms of global trade slowdown and increased scrappage and lay outs," Chief Executive Rupert Pearce said.

"It (Other OTC: ITGL - news) 's not a benign operating environment out there, but we are well positioned. We grew market share in the maritime sector over 2015, showing the strength of the tools we are playing with, it's just a difficult environment."

Pearce said the money was required to upgrade some older satellites and supply some equipment for new contracts for connectivity on aircraft.

"This means less free cash flow and so less net present value," said analysts at Haitong Research.

Inmarsat completed its Global Xpress network last year, giving it the capacity to supply major airlines as well as shipping with broadband connections.

It has signed deals with Lufthansa and Singapore Airlines, and Pearce was confident more deals would follow.

"There's a lot of interest and a backlog of discussion and announcements to come," he said.

In the short-term, however, the company is seeing pressure on prices as more companies entered the market.

"There's an enormous global opportunity being chased (...) but it's putting pricing pressure on the business in the short term, and it's something we need to think about and counter," he said.

But he added that Inmarsat was focused on markets where its global connectivity was a major advantage, such as global shipping and aircraft.

The British company reported earnings before interest, tax, depreciation and amortization of $726 million on revenue broadly flat at $1.27 billion.

It said it expected group revenues would be $1.23 to $1.30 billion this year, and reach between $1.45 and $1.6 billion in 2018. (Editing by Kate Holton)