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Bouygues' drop in profits cushioned by strong showing at telecoms arm

Bouygues' drop in profits cushioned by strong showing at telecoms arm
FILE PHOTO: The logo of Bouygues Telecom is seen at the entrance of a shop in Nice, France October 8, 2018. REUTERS/Eric Gaillard/File Photo GLOBAL BUSINESS WEEK AHEAD   -   Copyright  Eric Gaillard(Reuters)
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By Dominique Vidalon

PARIS (Reuters) – A strong showing at Bouygues’ <BOUY.PA> telecoms arm enabled the French conglomerate to weather problems at its construction business that had led to a drop in group profit for the first nine months of the year.

The family-controlled group, which also builds roads and owns France’s biggest private TV broadcaster TF1 <TFFP.PA>, also stuck to its lowered guidance for a stable or slightly lower current operating profit in 2018 as a whole.

The company said higher profit for its telecoms business reinforced the case it could operate independently after a failed attempt at a merger with market leader Orange <ORAN.PA> two years ago.

“Bouygues Telecom was never for sale. The idea of further strengthening the business in France has always been there though it is not on the agenda at this stage,” Bouygues’ deputy chief executive Philippe Marien told reporters on Thursday.

Bouygues last month cut its operating profit forecast, citing difficulties in the completion of three energy and services projects at Bouygues Construction and at its Colas arm.

In the event, nine-month operating profit fell 12 percent to 820 million euros (726 million pounds), above analysts’ forecasts for a profit of 797 million euros.

Shares rose 2.3 percent in early trading and remained in positive territory as analysts took some solace from the telecoms earnings.

Operating profits at Bouygues Telecom rose by 51 million euros to 314 million euros. Bouygues Telecom won more customers and kept its targets regarding future growth.

Bouygues Telecom competes in France along with Orange, Altice Europe <ATCA.AS> and Iliad <ILD.PA>.

Chief Executive Martin Bouygues said in August he was keeping an open mind about potential tie-ups in the French telecoms sector but cautioned no deal was likely before early 2019.

Marien added that Bouygues’ construction arm still had good prospects in spite of its problems this year, pointing out contract wins with Cambridge University and in Australia, and a record order backlog of record 33.8 billion euros.

“The good long-term trends in construction remain unchanged despite temporary difficulties,” said Marien.

($1 = 0.8837 euros)

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta/Keith Weir)

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