Zon Optimus profits show resilience to Portugal's weakness
LISBON Nov 14 (Reuters) - Portugal's newly-merged telecom firm Zon Optimus reported flat nine-month core profits on Thursday, showing some resilience to the country's tough economic conditions.
It was the first set of earnings since Zon and Sonaecom's mobile phone unit, Optimus, agreed to merge to create the country's second-largest telecoms firm.
The deal was designed to increase competition for former state monopoly Portugal Telecom.
Zon Optimus earnings before interest, taxes, depreciation and amortisation (EBITDA) inched up one percent to 418 million euros. Revenues fell just 2.8 percent to 1.08 billion euros.
Chief Financial Officer (CFO), Jose Pedro Costa, said this growth in EBITDA was achieved against the very negative backdrop of the Portuguese telecommunications market, He said the earnings showed Zon Optimus' resilience.
Portugal's bailed-out economy has started to emerge from its worst recession in three decades in the second quarter, but is still expected to contract by 1.8 percent for all of 2013.
Net profit fell 18 percent to 77 million euros ($103.21 million) from a combined pro-forma result a year-ago, when Zon was a separate company. The drop stemmed from restructuring costs of the merger but the performance the 'core' telecom business at home was positive despite Portugal's economic frailties.
"Zon Optimus presented a solid set of numbers impacted by significant accounting adjustments," BPI analysts wrote in a research note. "Still the profitability and cash flow generation seem to be running ahead of our numbers and significantly ahead of consensus," they said.
Zon Optimus stocks were up over 3 percent on Thursday, at 5 euros and outperforming the broader Lisbon market, which was up 0.3 percent. ($1 = 0.7460 euros) (Reporting by Sergio Goncalves, Writing by Daniel Alvarenga. Editing by Jane Merriman)