France Telecom reports first-half profits slump

28th July 2006, Comments 0 comments

PARIS, July 27, 2006 (AFP) - France Telecom reported on Thursday that net profit in the first half had fallen by 30.2 percent to EUR 2.346 billion but stood by most of its targets for the whole of the year.

PARIS, July 27, 2006 (AFP) - France Telecom reported on Thursday that net profit in the first half had fallen by 30.2 percent to EUR 2.346 billion but stood by most of its targets for the whole of the year.

The group nonetheless warned it would not be able to increase so-called organic or internal growth of sales by two percent as forecast because of weaker-than-expected dynamics in its markets.

Eighty-five percent of the group's activity is in western Europe, where markets are saturated and "there is very intense competition", group financial director Gervais Pellissier said.

Amid a battle to hold on to clients there, and "within the context of slower growth, the group has favored a balance between profitability and market share," he added.

Analysts focused on this and the price of shares in the group fell by 1.45 percent to EUR 16.36, while the CAC 40 index gained 1.18 percent overall.

The profits fall included a positive contribution 12 months ago from the return of an unused provision.

Sales rose by 9.3 percent from the equivalent figure in 2005 to EUR 25.85 billion. On a comparable basis the increase was 1.4 percent.

Operating profit fell by 17.7 percent to EUR 5.33 billion.

Gross operating profit rose by 1.8 percent to EUR 9.47 billion EUR and net debt was almost flat at EUR 47.2 billion EUR from EUR 47.8 billion in the first half of last year.

The ratio of debt to gross operating margin was 2.49.

Pellissier said: "These results are in line with the company's objectives."

The big fall in first-half net profit reflected the recovery in the results 12 months ago of a provision of EUR 200 million, he said.

Analysts at one brokerage in Paris, who declined to be named, commented that "France Telecom's performance in the first half does not point to a change of the trend.

"Expectations for targets for the generation of cash through internal growth is linked more than ever to cuts in costs."

Copyright AFP

Subject: French news

0 Comments To This Article