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UPDATE 2-TF1 profit falls 17 pct, holds sales forecast
July 25, 2013 / 7:41 AM / in 4 years

UPDATE 2-TF1 profit falls 17 pct, holds sales forecast

* Profit, ad revenue fall less than expected

* Shares surge 9 pct, up 31 pct this year

* Says Q3 ad revenue outlook cloudy (Adds comment from conference call)

By Christian Plumb

PARIS, July 25 (Reuters) - France’s biggest private broadcaster TF1 on Thursday reported a milder than forecast 17-percent slide in quarterly profit and reiterated a full-year sales target already reduced to reflect the weak economy.

Its shares surged 9 percent on relief that its 48.4 million euro ($64.06 million) second-quarter profit - as well as a 5 percent drop in second quarter advertising revenue - were ahead of expectations.

Still, Finance Director Philippe Denery acknowledged on a call with analysts that with regard to third-quarter advertising revenue there was “neither an improvement nor a deterioration for the moment but in any case visibility remains weak.”

TF1, which held its forecast for full-year revenues of 2.5 billion euros, said it generated 9 million euros in recurring savings under a cost-cutting plan, bringing the total to 31 million since June 30, 2012. The group is targeting 85 million in recurrent savings by the end of 2014.

It is also “bringing in specific measures intended to generate further savings in 2013” although Denery and CEO Nonce Paolini declined to elaborate on the conference call.

“Each time they mention anything on cost savings it’s received quite well,” Liberum analyst Lisa Hau said, noting that her firm nonetheless has a “sell” rating on the stock given the company’s struggles with competitive pricing.

She calculated advertising revenue was declining more rapidly than than at rival broadcaster M6, which earlier this week reported a quarterly drop of just 0.6 percent, while acknowledging the environment remained difficult.

TF1 shares are up 31 percent so far this year, helped by optimism that margins could be further boosted by cost cuts as well as European court ruling that means private broadcasters will not have to compete with public stations for scarce advertising funds.

They have outperformed France’s benchmark CAC-40 index , up 8 percent, while rival M6 has gained 20 percent so far this year. ($1 = 0.7555 euros) (Reporting By Christian Plumb; editing by Mark John)

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