Teleperformance hit by French call-centre costs
* 2009 guidance cut sends shares lower
* CEO says France is company's biggest problem
* French unions oppose cost cuts, call centre closures
* Sees "significant" restructuring costs in France
* Shares down 3 percent
By Lionel Laurent
PARIS, Nov. 26 (Reuters) - French call-centre operator Teleperformance (ROCH.PA) cut its guidance for 2009 on Thursday, warning that price pressures and poor performance in its home market would drag down like-for-like sales and profits.
"We have a weakness and, unfortunately, it is France," said CEO Jacques Berrebi, during a conference call.
"France represents 80 percent of our company's problems," he added, though the country only accounts for 13 percent of its revenues.
Teleperformance said its French business, which provides call-centre services for companies such as mobile operator SFR (VIV.PA), was posting losses because of structurally high costs, aggravated by a challenging economic environment and intense pressure on prices.
To illustrate the problem, Teleperformance said the minimum wage in France had risen 4.5 percent over the past two years while prices the company charged had fallen 5 percent.
Turning the unit around would be a priority for 2010, the company said, warning that it would entail "significant" restructuring costs.
But it may be tough for Teleperformance to cut costs in France, given strict labour laws and the rising discontent of its labour unions. Unions have mobilised to protest against the company's plan to shut three of its four call centres in France, and are also opposed to a proposal to relocate workers outside of the Paris region as a way to reduce costs.
The French business is expected to post an operating loss of around 36 million euros this year. France is home to 12,500 of its salaried employees, or about 12.5 percent of the company's total.
Teleperformance said it expected total group sales in 2009 to fall 1.3 percent on a like-for-like basis, to 1.8 billion euros ($2.72 billion). France and Europe would drag down earnings before interest, tax, and amortization (EBITA) by 15 percent to about 155 million euros.
The company expects a better performance from North America and Mexico, thanks to its 2008 acquisition of The Answer Group, as well as from South America and Asia. It said these regions would post 13.2 percent revenue growth in 2009.
Teleperformance shares ended the day down 3.1 percent, at 22.68 euros.
The stock has gained 17.5 percent since the start of the year, underperforming a 79.3 percent gain for American rival Convergys (CVG.N) and a 31 percent gain for Sykes (SYKE.O).
Teleperformance is trading at a forward price-to-earnings ratio of 12.45, lower than the marketing-sector average of 24.60.
Analysts said investors were disappointed by the lack of detail on restructuring and by the new guidance, which suggested a big deterioration in the last three months of 2009.
"The big problem is the gap between the fourth quarter and the first three quarters," said Gregory Jette, an analyst with Jefferies. "We are seeing volumes going down and problems of price pressure (due to overcapacity in the market)."
A Teleperformance spokeswoman said part of the reason why volumes were falling was because of fewer innovations in the Internet and telecoms sector, placing less of a burden on call centres.
For 2010, Teleperformance said group sales would grow between 0 and 3 percent on a like-for-like basis.
Teleperformance has a market cap of just under $2 billion. It operates around 250 contact centres in 47 countries.
(Additional reporting by Marie Mawad; editing by Elaine Hardcastle/Will Waterman)
($1=.6625 Euro)
((+33 1 49 49 56 85; lionel.laurent@thomsonreuters.com; Reuters messaging: lionel.laurent.reuters.net@reuters.com)) Keywords: TELEPERFORMANCE/
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