September 1, 2009 / 5:40 AM / 10 years ago

UPDATE 4-Vivendi Q2 beats forecasts, says Zain deal dead

* Q2 EBITA 1.51 billion euros, beating expectations

* Keeps 2009 financial goals, eyes lower debt at year-end

* Says Zain acquisition issue “over”, silent on Digital Plus

* Very limited impact seen of Disney-Marvel deal for Vivendi

(Adds CEO comments on Disney-Marvel, Digital Plus)

By Dominique Vidalon

PARIS, Sept 1 (Reuters) - Vivendi (VIV.PA), Europe’s largest entertainment group Vivendi, delivered forecast-beating second-quarter profits and ruled out reviving talks with Kuwaiti telecoms firm Zain (ZAIN.KW).

Chief Executive Jean-Bernard Levy said the French company was still keen to expand in emerging markets but was sticking to a cautious acquisition policy which would sharply reduce its debt in 2009.

Vivendi ended talks to buy a majority stake in Zain’s African telecoms unit in July and said the issue was now “over”.

Levy brushed off the threat to Vivendi from Walt Disney Co’s (DIS.N) $4 billion deal on Monday to buy Marvel Entertainment Inc MVL.N. [ID:nN31433031].

Levy told Reuters the impact of the year’s biggest media deal would be limited to “a few games licences”. Vivendi said it expected a strong rise in adjusted operating income for 2009 and confirmed a dividend payout ratio of at least 50 percent of net adjusted income.

“We are confident in our ability to drive long-term profit growth and reiterate our commitment to distribute high dividend streams for 2009 and beyond,” Levy told a call with analysts.

Chief Financial Officer Philippe Capron said Vivendi would aim to improve cash generation in the second half of the year and said it had over 6 billion euros in undrawn credit lines.

Vivendi shares were up 1.2 percent at 20.11 euros by 1122 GMT, bucking a negative European media index .SXMP.

“Given Vivendi’s recent strong underperformance, we believe it’s time to massively reposition ourselves on the stock, whose risk profile seems very limited,” broker Oddo Securities said.

Vivendi shares have lost 14 percent so far this year, lagging both the European telecoms .SXKP and media sectors.

ZAIN DEAL DEAD, SILENCE ON DIGITAL PLUS

Levy said that Vivendi remained “very cautious on external growth” and that net debt could decline to slightly over 7 billion euros ($10 billion) at the end of the year, from 8.5 billion euros at the end of June 2009.

“At this stage we do not have any acquisition project to disclose,” said Levy. He was tight-lipped on whether Vivendi was still interested in buying a stake in Spain’s pay-TV channel Digital Plus (PRS.MC).

Vivendi, a majority stake holder in Maroc Telecom (IAM.PA) and which recently bought a stake in a telecoms operator in Mali, however remains keen on expanding in emerging countries.

When asked about Zain, Levy said: “The Zain dossier is over... We do not intend to pay more than what it was worth.”

Asked if he would again look at Zain’s assets if offered a lower price, he said: “This issue in not on the agenda.”

Zain, whose shareholders voted to scrap individual ownership limits on Monday, is in negotiations to sell a stake in its African business. [ID:nLV195089]

Vivendi would also decide before the end of the year on the future of its 20 percent stake in NBC Universal, Levy said. It has an option to sell the stake each November until 2016.

CRISIS-RESILIENT EARNINGS

With 70 percent of revenue coming from phone, Internet, pay-TV and online video games subscriptions, Vivendi is one of the most defensive stocks in the media sector, with low exposure to bleak advertising markets.

“Vivendi achieved a very solid first half 2009 in a difficult environment,” Levy said, adding the impact of the crisis on the company was “real but limited”.

The owner of Activision Blizzard, the world’s top video games company, and of SFR — France’s second-biggest mobile operator — said second-quarter earnings before interest, taxes, and amortisation (EBITA) rose 10.4 percent to 1.51 billion euros.

Group revenue grew 11 percent to 6.65 billion euros, driven by past acquisitions. The average forecasts in a Reuters poll of 10 analysts were 1.42 billion euros for EBITA and 6.69 billion euros for revenue.

Vivendi owns Universal Music, the world’s largest music company whose top selling artists in the first-half included U2, Lady Gaga and Eminem. The division expects a decrease in 2009 EBITA due to “more challenging market conditions and higher than expected restructuring costs”. (Additional reporting by Cyril Altmeyer in Paris; Editing by Marie Maitre/Will Waterman/Elaine Hardcastle) ($1=.6964 Euro)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below