Vivendi earnings beat forecasts

PARIS: Vivendi beat analysts’ forecasts with a 20.9% rise in core third-quarter profit yesterday, helped by higher margins from video game World of Warcraft, pay television in France and Maroc Telecom. 

But share reaction was muted after the French group, which last week confirmed a failed friendly takeover approach by US private equity firm KKR, kept its profit goal for the year. 

The group said it still expects 2006 net adjusted profit of 2.6bil euros (US$3.3bil), or 16% growth, with a dividend distribution rate of a minimum of 50% of net profit. 

Vivendi, which controls France’s number two mobile operator SFR, reported adjusted earnings before interest, tax and amorti sation (EBITA) of 1.3bil euros. 

This compared with average expectations of 1.189bil euros according to a Reuters poll of 11 analysts and a comparative figure for last year of 1.075bil. 

Net adjusted profit reached 731mil euros, up 28.2%, also above average expectations of 656mil euros. 

“These are rather reassuring results, topping expectations in pay-TV and Maroc Telecom but they did not raise the profit outlook,” one sector analyst said. 

Core profit at pay-TV unit Canal Plus was up 51mil euros at 148mil, beating expectations for 111mil euros. 

Canal Plus’s core profit was lifted by growth in pay-TV operations in France, which benefited from strong portfolio additions and increased revenue per subscriber and the favourable impact of the calendar timing of French Ligue 1 soccer. 

Core profit at Maroc Telecom jumped 21.6% in the quarter to 281mil euros, also topping expectations for 262mil, helped by revenue growth and cost control. 

Core profit at Vivendi Games rose 118.2% to 24mil euros, compared with forecasts for 22mil, driven by revenue growth and an increased contribution from the higher margin of the World of Warcraft business. 

The SFR mobilephone unit achieved a 2% rise in core profit to 706mil euros, almost in line with analysts’ forecasts for 702mil euros. 

Cost controls helped offset the rising cost of the GSM licence, which was renewed in April with a new tax of 1% of revenues, the statement said. 

On Tuesday, Britain’s Vodafone Group Plc said it was happy with its 44% stake in SFR and chances of its sale to Vivendi were “highly unlikely”. 

Vivendi also owns the world’s largest record company Universal Music Group, which posted an 11.3% rise in core profit at 138mil euros, thanks to improving margins and compensation from the settlement of litigation with Napster. Analysts had forecast 141mil euros. – Reuters  

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