FT’s net profits exceed expectations in 1H, confirms outlook

2 Aug 2007

France Telecom (FT) today posted consolidated net income of EUR3.31 billion (USD4.52 billion) for the first half of 2007, up 41% from EUR2.35 billion a year earlier, and beating an average forecast of EUR2.34 billion from a Dow Jones poll of seven analysts. Net profits were aided by a EUR671 million fall in income tax from the ‘recognition of deferred tax assets in France’ and amendments to the income tax rate in the UK, the operator said in a statement. The French group attributed the strong performance to the stabilisation of its domestic business and the positive impact of growth in emerging markets. Revenues rose by 1.9% on a comparable basis (+2.1% on a historical basis) to EUR25.9 billion, from EUR25.4 billion a year earlier, driven by new markets which contributed 13% of the group total, compared with 10% a year ago. In mature markets in western Europe, FT reported a steady performance with revenues in its home market climbing 0.7% year-on-year. The group confirmed its full-year outlook for 2007 of a ‘near stabilisation’ of gross operating margins (GOM, considered an equivalent to EBITDA) and organic cash flow of EUR6.8 billion (EUR3.26 billion in 1H07), adjusted for the sale of PagesJaunes in late 2006. Operating income totalled EUR5.46 billion, up from EUR5.14 billion previously, resulting from a EUR158 million increase in the GOM, a EUR317 million gain on the disposal of assets and a EUR116 million decrease in the impairment of non-current assets. These were offset by EUR293 million of combined amortisation expenses and share-based compensation linked to a new scheme under the NExT plan, the company said.

France, Orange Group