Post by merg on May 28, 2004 9:58:27 GMT -5
Associated Press
Vivendi Slashes Loss in First Quarter
(AP, 05/27/2004 3:34 PM)
By Laurence Frost
French media and telecommunications company Vivendi Universal slashed its first quarter losses and posted a 10 percent increase in operating profit Thursday, offering a clear sign that the worst is over as it recovers from a brush with bankruptcy.
Vivendi's net loss shrank to 6 million euros ($7.3 million) from January to March, down from 319 million euros a year earlier. Operating profit rose to 930 million euros from 844 million euros. The group announced earlier that first quarter revenues fell 4 percent to 5.97 billion euros.
The results beat analysts' expectations, and Vivendi shares rose steadily throughout the day to close 3 percent higher in Paris. The company's U.S.-traded shares finished 6 percent higher, up $1.49, at $25.67.
Once again the telecoms division contributed most to the improved results as Vivendi took another step away from the heady days when former chairman Jean-Marie Messier ran up debts of 35 billion euros ($42 billion) in an acquisition spree of epic proportions. Messier was forced out in July 2002.
"They're definitely out of the woods, but there are some businesses there are still concerns about," said Richard Jones of Lehman Brothers. He cited Vivendi's music arm, pay-TV operator Canal Plus and its struggling video games division as those still facing problems.
The telecoms division — which includes French operator SFR Cegetel and a 35 percent stake in Morocco's Maroc Telecom — saw its operating margin rise to 29.3 percent from 28.2 percent a year earlier as operating profit jumped 18 percent to 713 million euros.
Canal Plus's operating profit rose 68 percent excluding the sale of Italian unit Telepiu and other acquisitions and selloffs. Including those, however, profit fell 53 percent, while the operating margin slid to 8 percent from 13.6 percent.
Cost-cutting at Universal Music Group helped the division reduce its operating loss by 43 percent to 16 million euros ($19 million) as it battles against a wider slump in global music sales. Vivendi said new albums from artists including Mariah Carey , Eminem and 50 Cent would bring further improvement to the division's profit through year-end.
A turnaround at the video games division is farther away, however. The unit widened its operating loss to 45 million euros from 28 million euros.
Vivendi said net debt now stands at about 7 billion euros ($8.5 billion) — down from 11.6 billion euros ($14.0 billion) two months ago thanks to this month's completion of the sale of its U.S. entertainment division to NBC, General Electric's television arm.
The Universal film studios, theme parks and television operations together posted a 15 percent increase in operating profit in their last quarter under the Vivendi Universal banner.
Vivendi said the unit's operating performance was mainly due to strong results from the Universal Television Group and its Universal Parks and Resorts, where operating profit increased 27 percent.
These figures were particularly good news for Vivendi, which retains a 20 percent stake in the combined NBC-Universal but has a much larger exposure to the theme parks because of four-year risk sharing clause enshrined in the merger.
Under the deal, Vivendi would pay out compensation if NBC-Universal sold its theme parks at a loss.
Operating profit at Universal Pictures fell 13 percent. Vivendi said the movie studio's profit would have risen 2 percent at constant exchange rates, stripping out damage from the euro's rise against the dollar and other currencies.