Liberty Global Falls After Lowering Post-Deal Profit Outlook

  • Growth in 2016 operating cash flow now seen at 4%-5%
  • Company had seen 5%-7% growth at Liberty Global Group

Liberty Global Plc fell the most in a month after the London-based media company lowered its profit forecast for 2016 as it digests a Belgian acquisition.

The shares fell as much as 4.5 percent, which would be the biggest drop since since July 5. The company, controlled by billionaire John Malone, said Friday it expected operating cash flow for Liberty Global Group to rise 4 percent to 5 percent in 2016, factoring in the acquisition of the former Base mobile-phone business in Belgium, after previously projecting 5 percent to 7 percent. The forecast was unchanged for the company’s Latin American operations, Lilac Group.

The new guidance is “more realistic,” according to Dhananjay Mirchandani, an analyst with Sanford C. Bernstein & Co. who rates Liberty Global “market perform.”

Base “was underperforming when we closed the deal,” Chief Executive Officer Michael Fries said on a conference call. He said the change in guidance also reflected some currency adjustments.

Liberty Global fell 3 percent $31.42 at 12:23 p.m. Friday in New York. The shares have declined 15 percent this year.

On Thursday, Liberty Global reported second-quarter net income of $101.4 million, compared with a loss of $464.7 million a year earlier. European revenue grew 5.1 percent to $4.47 billion, according to a regulatory filing. That exceeded the average analyst estimate of $4.46 billion.

Liberty Global added 231,300 customers in Europe in the period, double the year-earlier gain, driven by gains in its cable products.

The results came a day after European Union regulators cleared the cable company’s Dutch joint venture with Vodafone Group Plc. The deal, announced in February, unites the companies in the Netherlands to challenge Royal KPN NV and Deutsche Telekom AG with bundles of phone, Internet and television. Vodafone is selling its fixed-line business.

The tie-up between Liberty’s Ziggo brand and Vodafone Netherlands would create a business with more than 5 million mobile subscribers, 4 million video clients and 3 million broadband customers.

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