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Bouygues' telecoms arm curbs COVID impact in first half

PARIS (Reuters) - French conglomerate Bouygues BOUY.PA's first-half results beat market expectations on Thursday as the strong performance of its telecoms arm reduced the financial hit of the COVID-19 crisis.

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Shares traded 2.2% higher at 0723 GMT, making it the best performing stock in France's benchmark index CAC 40. .FCHI

Bouygues Telecom was the only division to see sales growth in the first half, the family-run group said in a statement. It was driven by an increase in mobile and broadband customers.

By contrast, Bouygues’ construction activities, which represent the bulk of sales, fell sharply over the first six months when France experienced a severe two-months lockdown.

Group current operating loss was 132 million euros ($156 million) in the first-half, reflecting a fall of 585 million euros from a year earlier.

This beat the median average of nine analyst estimates compiled by the company, which predicted a current operating loss of 336 million euros.

The COVID impact pushed group sales down 15% on like-for-like basis to 14.8 billion euros, also beating the market consensus.

For Bouygues’ construction activities, which span real estate and the building of infrastructure, the hit on sales because of the coronavirus outbreak was 2.5 billion euros.

Bouygues Telecom grew by 4% from a year earlier, with an estimated COVID impact on revenue of 70 million euros. The division’s current operating profit grew by 23 million to 253 million euros.

“The long-term trends on which the group relies remain buoyant,” Chief Executive Martin Bouygues said.

Bouygues did not provide new group financial targets for 2020 after dropping them earlier this year.

However, it predicted a return to “significant profitability” in the second-half, although still below the levels reported over the same period in 2019.

Bouygues’ telecoms arm expects to grow by around 4% in 2020, versus a previous target of 5%. It also sees free cash flow reaching 250 million euros for the year, close to the 300 million-euro target set at the beginning of 2020.

Reporting by Mathieu Rosemain; Editing by Sudip Kar-Gupta and Barbara Lewis

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