Vivendi cuts losses, eases debt load

17th March 2004, Comments 0 comments

PARIS, March 17 (AFP) - The French media and telecommunications group Vivendi Universal reported on Wednesday that it had slashed record losses and risen substantially through asset sales from a debt crisis in 2002.

PARIS, March 17 (AFP) - The French media and telecommunications group Vivendi Universal reported on Wednesday that it had slashed record losses and risen substantially through asset sales from a debt crisis in 2002.

The group, which had diversified its original utilities business with costly adventures into the global media industry, encouraged investors Wednesday with results signalling that efforts to reconstruct a viable company were producing results.

However, performance by music activities plunged and the company said it was working to restructure this part of the business.

Vivendi booked a net loss of EUR 1.14 billion (USD 1.4 billion) for 2003, against a record EUR 23.3 billion loss in 2002, and said it expected to see strong profit growth this year.

The debt brought the group to the verge of collapse in 2002.

At the end of December 2003, group debt stood at EUR 11.6 billion, owing to an investment of EUR 4 billion in its SFR mobile telecom unit, a company statement said.

Debt was nonetheless down from EUR 12.3 billion at the end of 2002, and a massive EUR 34.9 billion in June 2002 that resulted from a Vivendi buying spree in the midst of the high-tech and media bubble.

Chief Executive Officer Jean-Rene Fourtou said: "In 2004, I expect Vivendi Universal to deliver strong growth in its profit, to reach a level of debt below EUR 5 billion at year end and be in a position to distribute dividends to its shareholders in 2005."

Markets welcomed results that exceeded some forecasts, pushing Vivendi shares up by 1.10 percent in midday Paris trading to EUR 21.23 in a market that was 0.66 percent higher overall.

"A strong cash flow of EUR 4.4 billion allowed the group to reduce its debt below EUR 12 billion," noted the Swiss investment bank UBS Warburg.

Analysts at the Fortis Bank said: "Vivendi confirmed it is remaining a media/telecoms group."

Core earnings last year amounted to EUR 3.309 billion, down from EUR 3.788 billion a year earlier, the company's figures showed.

UBS said the 2003 figure matched its recently upgraded estimate and exceeded a market consensus of EUR 3.1 billion.

The year-on-year comparison did not allow however for the acquisition of entertainment assets from InterActiveCorp or the disposal of Vivendi Universal Publishing and a majority stake in Vivendi Environnement, now known as Veolia Environnement.

On a comparable basis, operating profit rose by 61 percent.Vivendi said Wednesday it would dispose of a residual 20-percent interest in Veolia this year.

Meanwhile, it took a charge for a fall in asset values of EUR 1.8 billion, notably at the Universal Music Group (UMG) and Vivendi Universal Games.

On the positive side, Vivendi's SFR Cegetel telecommunications unit saw full-year profit boosted by 32 percent to EUR 1.91 billion from EUR 1.44 billion in 2002.

Vivendi Universal Entertainment (VUE) posted an operating profit of EUR 931 million in 2003, up by 14 percent from the previous year.

Its music arm showed an 87-percent drop in operating profit to EUR 70 million however, and Fourtou said that UMG and the games unit "are implementing a strong and determined reorganization plan".

The company also said that an accord signed with General Electric would create the NBC Universal entertainment group in the second quarter of this year, in which Vivendi would hold a roughly 20-percent stake.

Separately, Vivendi indicated that it had begun legal proceedings against USANi Sub LLC, a subsidiary of the US group InterActiveCorp run by former partner Barry Diller, to force USANi to honor Vivendi letters of credit.

The French group seeks to cancel certain price commitments taken within the framework of VUE's partnership accord with Diller as well.

© AFP

                                                              Subject: France news

 

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