French video games maker Ubisoft cut its mid-term sales forecast on Tuesday but sees room to boost profitability by relying more on older games, the company said as it continues to oppose the advances of prospective suitor Vivendi (VIV.PA).
Annual sales for the year ending March 2019 are now expected to total about 2.1 billion euros ($2.33 billion), down from the 2.2 billion euros the company expected when announcing its medium-term targets in February 2016.
However, the company maintained its operating profit target for the 2018/19 year at around 440 million euros, increasing its operating target margin to 21 percent from 20 percent previously.
"We depend much less on new games launches...," Chief Financial Officer Alain Martinez said in call with reporters.
"This allowed us to largely offset the fact that we have one fewer game and still be able to have an improved profitability," he added.
Back-catalogue sales, or older games, already accounted for nearly half of total sales in the past fiscal year, up from around a quarter a year ago.
In the year just ended, Ubisoft reported a 4.7 percent rise in full-year sales to 1.46 billion euros, at the bottom of its lowered target range of 1.46-1.50 billion euros announced in February.
Full-year operating income last year rose 40.7 percent to 237.7 million euros, in line with the company's original target of 230-250 million euros, Ubisoft said in a statement.
The maker of the Assassin's Creed and South Park game series also announced it expects annual sales for the current fiscal year of around 1.7 billion euros, adding that first-quarter sales should account for approximately 170 million euros, a 22 percent increase on last year's figure.
Operating income is expected to rise to 270 million euros, the company added.
Martinez also again rejected the possibility of a takeover by French tycoon Vincent Bollore's Vivendi, its largest shareholder after gradually amassing a 25 percent stake.
"We still consider that there is a lot of value to create at Ubisoft, and we still consider that our independence is the best guarantee to create this value," he said.
Vivendi plans to speed up its expansion in video games and advertising this year, with Ubisoft and Havas expected to be the first targets, sources close to the matter said last month.
Following Vivendi's move on Friday seeking to buy Bollore's 60 percent stake in the advertising agency, "there is a sense that a deal for Ubisoft could follow," Kepler Cheuvreux analyst Conor O'Shea wrote in a note after the announcement.
(Reporting by Piotr Lipinski and Wout Vergauwen; Editing by Greg Mahlich)