PARIS (Reuters) - French conglomerate Bouygues (BOUY.PA) reported a forecast-beating 37 percent jump in nine-month operating profits, driven by a robust performance at its telecoms arm, which raised its forecasts and helped to send Bouygues shares higher.
The family-controlled group, which also builds roads and owns France’s biggest private TV broadcaster TF1 (TFFP.PA), kept its target for an improvement in group profits in 2017 while Bouygues Telecom raised its 2017 goal for its EBITDA (earnings before interest, depreciation and amortization) margin.
Deputy chief executive Philippe Marien told a conference call that Bouygues, which failed to merge Bouygues Telecom with market leader Orange (ORAN.PA) last year, believed its stand-alone strategy was the right one.
The consolidation of the French telecom sector was an issue that will be “behind us for a long time”, Marien added.
Nine month revenues rose 3 percent to 23.828 billion euros ($28.10 billion), while the current operating profit rose by 37 percent to 976 million euros. This included a capital gain of 28 million euros on the sale of 50 percent of its ‘Nextdoor’ arm.
The results beat a company-compiled consensus of analysts’ expectations for an operating profit of 934 million euros and sales of 23.703 billion euros, with Bouygues also benefiting from a strong performance at its French construction arm.
Bouygues Telecom was now expecting a 2017 EBITDA margin between 26-27 percent, having achieved 27.7 percent in the first nine months. This compared to an earlier goal for a margin of slightly above 25 percent.
Bouygues shares were up 4.6 percent in early session trading, with the stock touching its highest level since September 2008.
Bouygues shares, which are up by around 26 percent since the start of 2017, were also the best performer on France's benchmark CAC-40 index .FCHI.
Analysts at brokerage Jefferies kept a “buy” rating on Bouygues shares, citing a positive reaction from the increased guidance at Bouygues Telecom.
In the nine months to September 30, Bouygues Telecom’s operating earnings reached 395 million euros compared with 117 million euros in the same period last year.
Growth benefited from the first positive effects of price increases, and the telecoms arm added 110,000 fixed-line phone customers and 295,000 mobile customers in the third quarter.
Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta