PARIS (Reuters) - Bouygues’ (BOUY.PA) shares fell sharply in early trading on Friday after the French conglomerate lowered its full year operating profit forecast, citing difficulties at its construction businesses during the third quarter.
The family-controlled group - which also owns France’s biggest private TV broadcaster TF1 (TFFP.PA) and mobile phone company Bouygues Telecom - said late on Thursday it was now targeting a stable or a slightly lower current operating profit in 2018 versus 2017 for the company as a whole.
It had previously banked on an improvement in margins and profits at its construction unit, but said these would now fall. Financial director Philippe Marien said this was due to temporary setbacks, which did not change the better mid-term and long-term prospects for the division.
The cut to the group's overall profit outlook sent Bouygues shares to the bottom of Paris' benchmark CAC-40 index .FCHI. They were down 6.8 percent at 0738GMT.
Analysts expressed surprise at Bouygues’ update given that two weeks earlier, the company had said at an investor presentation that it remained upbeat over its construction arm.
The group detailed late on Thursday that it was expecting Bouygues Construction’s operating profits for the first nine months of 2018 to drop by about 140 million euros ($160 million) from the same period in 2017.
The division was hit by litigation issues in Ireland, and extra costs and delays after glitches at two biomass power plants in the United Kingdom.
At its Colas (COLP.PA) civil engineering business, which was partly hurt by disruption to freight traffic amid rail strikes in France earlier this year, operating profits in the year to September would drop by about 25 million euros, it said.
Analysts at brokerage Berenberg wrote that Bouygues’ warning was “badly timed”, while Kepler Cheuvreux and Credit Suisse both cut their price targets on Bouygues’ shares.
Bouygues shares are down by around 20 percent so far in 2018, underperforming a 4 percent fall on the CAC-40.
($1 = 0.8744 euros)
Reporting by Sarah White and Gwenaelle Barzic; Editing by Sudip Kar-Gupta