Bouygues reports profit slump, but shares jump

Construction, television and telecoms group Bouygues reported a 32.0-percent plunge in net profit for the first half on Wednesday, but this was better than expected and the shares shot up over 10 percent. It also said that cost-cutting plans launched at its telecoms and television units "are bearing fruit". Net profit fell on a 12-month comparison to 188 million euros ($251.5 million), hit by a first-quarter loss at the TF1 television channel and in the telecom sector. Sales fell by 2.0 percent to 15.21 billion euros. The company said that a consensus by 20 analysts had been for a net profit of 165 million euros and sales of 15.23 billion euros. The group said that it now expected sales for the year to total 32.2-33.4 billion euros from 33.45 billion euros targeted previously. The downgrade reflected mainly the performance at the mobile telephone arm Bouygues Telecom which lowered it sales target to 4.6 billion euros from 4.85 billion euros. But market watchers reacted little to the lowered forecast, instead focusing on what they said were surprisingly good bottom-line results, as well as other, more positive, parts of the outlook. The price of shares in turn jumped by 10.5 percent to 25.33 euros in an overall lower market. The overall French market as measured by the CAC 40 index showed a loss of 0.21 percent. Meanwhile Bouygues Construction said that it had won two big contracts in Hong Kong and in the United States worth together slightly more than 1.5 billion euros. "In keeping with the second quarter of 2013, profitability should improve in the second half of 2013, meaning that 2012 should mark the low point in the Bouygues group's profitability," it said. Aurel BGC analyst Tangi Le Liboux said that Bouygues "is finding a better dynamic with a sequential increase in profitability in the second quarter", and specifically pointed to the group's statement about 2012 having been its low point.