PARIS (Reuters) - Leading French telecoms group Orange (ORAN.PA) cut its core operating profit guidance and failed to provide a definitive update on its full-year dividend policy on Thursday, sending its shares lower.
The Paris-based group, whose second-quarter core operating profit was in line with market expectations, now sees full-year core operating profits falling by 1%. It had previously expected it to be what it had termed “flat positive”.
Orange, which cut its 2019 dividend by 30% to 50 cents per share, said it would tell investors if it is able to go back to the 70 cents per share level for 2020 by the end of the year.
The company's stock was down by 3.1 percent at 0800 GMT, making the second-worst performer in the France's benchmark stock index CAC 40 .FCHI.
Chief Executive Stéphane Richard attempted to ease analysts’ concerns on the dividend.
“What we expect by the end of the year makes me very confident in our capacity to be back to 70 cents of dividend for this year, 2020,” he said on an earnings call, adding that the group would inform markets in November or December.
The company’s overall second-quarter sales dropped 0.4% to 10.4 billion euros (9.43 billion pounds), while core operating profits over the period were down by 1.8% as COVID-triggered lockdowns in Europe drove costs higher and led to a loss in lucrative roaming fees.
The telecoms industry has weathered the economic impact of the virus better than other sectors as people relied on their communications infrastructure to work from home during lockdowns, as well as playing video games and watching videos online for entertainment.
Sales in France grew by 2.7% from a year earlier, beating market expectations, in contrast with Spain, which expected a worst-than-feared 6.8% sales decline on fierce competition in the country.
Reporting by Mathieu Rosemain; Editing by Carmel Crimmins and Keith Weir