PARIS (Reuters) - French conglomerate Bouygues (BOUY.PA) posted a worse-than-expected first quarter group operating loss, due to weakness at its Colas road building division, although the company’s telecoms division showed further signs of strength.
The relatively strong performance at Bouygues Telecom
enabled the conglomerate to maintain its prediction of a further rise in full year profit, in spite of the weak first quarter.
A bitterly cold winter in Europe impacted Bouygues’ road construction arm Colas, yet Bouygues said the quarter was not representative of how the company was expected to perform over the full year.
Bouygues Telecom again improved its results, reflecting growth in its mobile and fixed-line customer base. Bouygues, which failed to merge its telecoms unit with market leader Orange (ORAN.PA) two years ago, said it should gradually improve profits over the course of 2018.
Asked about second quarter trends, deputy chief executive Philippe Marien said the climate would remain supportive for construction — thanks partly to plans to expand the Paris area’s infrastructure — and be “very competitive” in telecoms.
First-quarter revenues at the family-controlled group, which also owns France’s biggest private TV broadcaster TF1 (TFFP.PA), dipped 0.2 percent to 6.826 billion euros ($8.1 billion).
Its current operating loss also widened to 111 million euros from a 75 million loss last year, reflecting a 302 million loss at Colas, with the results coming in below market forecasts.
Bouygues' shares were down 1.2 percent in mid-session trading, among the worst performers on the Paris market .FCHI.
“Telecom ahead, property and Colas light,” said Barclays analysts, who have an “Equal Weight” rating on the stock.
Bouygues Telecom’s quarterly revenues rose 6 percent to 1.281 billion euros, with the unit’s current operating profit also surging 56 percent to 50 million euros.
Bouygues Telecom, which added 453,000 mobile customers in the first quarter, also confirmed its targets for 2018 and 2019.
France’s telecoms sector, hit by a price war following the entrance of low-cost player Iliad (ILD.PA) in 2012, has been the subject of takeover speculation in recent years.
Last month, Bouygues said it was not in discussions with any other operator, denying a report it was weighing a bid for the French SFR telecoms unit of rival Altice (ATCA.AS).
Bouygues Telecom has said it can prosper on its own and has responded with a turnaround plan including job cuts and a focus on the rollout of its 4G network and fixed-line broadband.
Bouygues Telecom’s robust performance came amid heavy promotions by Altice’s SFR and market leader Orange (ORAN.PA), which rival Iliad had partly blamed for its own weaker-than-expected results earlier this week.
Bouygues, which sees its debts standing at around 4 billion euros by end-2018, has nevertheless carried out some takeover deals of late, including its purchase of the engineering services business of utility Alpiq (ALPH.S).
Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Jon Boyle