Bouygues Quarterly Profit Rises 6.9% as It Slashes Costs

  • Company confirms targets for 2015, sees higher margins in 2016
  • Bouygues Telecom sales rise 4% as it gains subscribers

Bouygues SA, the French building, media and telecommunications conglomerate, said third-quarter earnings climbed 6.9 percent as the company cut costs at its phone and contracting operations in France and benefited from rising construction revenue abroad.

Operating profit before one-time items and restructuring costs climbed to 478 million euros ($515 million) from a restated 447 million euros while revenue dropped 3 percent, the Paris-based company said Friday in a statement. Bouygues reiterated its 2015 targets and said its priority remains a return to growth in its operating margins in 2016. Shares rose.

“Good commercial performance and execution of the transformation plan enabled Bouygues Telecom to confirm in the third quarter the return to growth seen in the previous quarter,” Bouygues said in the statement. “Current operating profit in the construction businesses rose in the third quarter of 2015, driven by strong international momentum despite a tough economic and competitive environment in France.”

Bouygues in June rejected an $11 billion offer from Billionaire Patrick Drahi for its phone operations that have been battered by a price war in the French market since 2012. The company, which has been selling other assets in recent years to maintain its dividend while keeping a lid on debt, is betting that the quality of its network and portfolio of frequencies will revive revenue and profit at Bouygues Telecom as subscribers increasingly watch videos and play games on their mobile devices.

Bouygues shares rose as high as 36.39 euros in Paris today, and were trading up 0.4 percent at 35.05 euros at 2:26 p.m. They have gained about 17 percent this year.

The company, which wants to add 1 million mobile customers and 1 million of Internet subscribers in the three years to 2017, gained 149,000 so-called mobile plan customers and 94,000 new broadband users in the third quarter.

With a new business model in place, Bouygues Telecom’s earnings before interest, taxes, depreciation and amortization should rise to its targeted 750 million euros this year from 694 million euros in 2014 as it eliminated jobs and other costs.

Telecom Profit

For its construction business, the company repeated its prediction that, excluding exchange rate effects, the current operating margin will remain stable this year as it gains contracts abroad and it adjusts to lower demand for roadworks from cash-strapped French local governments.

It’s too early to say whether French roadworks will decline further or stabilize next year, Chief Financial Officer Philippe Marien said on a call with journalists. On the other hand, the French construction market is benefiting from government measures that have revived buy-to-let investment, and first-time home buyers may get boost from enhanced government-subsidized home loans from start of next year, he said.

Third-quarter net income climbed 13 percent to 376 million euros, Bouygues said.

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