Orange H1 Net Profit Up, France Income Down; Confirms FY Growth View; Stock Dips

(RTTNews) - Shares of Orange SA (ORAN) declined around 3 percent in the morning trading in Paris after the French telecom major reported Tuesday weak restated EBITDA, a key earnings metric, in its home country in the first half, as well as weak EBITDA margin. Group restated EBITDA, however, increased with higher revenues, and the company posted significantly higher net profit, benefited by the sale of its U.K. joint venture EE. Further, the company confirmed its fiscal 2016 objective for restated EBITDA growth, citing positive momentum.

For the first half, net income attributable to equity owners was 3.17 billion euros, 188.3 percent higher than 1.10 billion euros a year ago. The significant increase in net income reflected mainly discontinued operations relative to the sale of EE which occurred in January 2016.

Operating income, meanwhile, declined 5.4 percent to 2.14 billion euros. The results reflected higher amortisation and depreciation, linked in particular to the acquisition of Jazztel and the full consolidation of Médi Telecom, and the recognition of an impairment related to Egypt.

First-half restated EBITDA was 5.913 billion euros, 2.1 percent higher than last year. On a comparable basis, restated EBITDA edged down 0.6 percent. Restated EBITDA declined 2.3 percent in France to 3.24 billion euros.

The restated EBITDA margin was 29.4 percent, a decline of 0.3 percentage points compared to the prior year.

In the second quarter, restated EBITDA rose 0.1 percent after falling 1.6 percent in the first quarter.

Group revenues for the first half were 20.08 billion euros, 2.7 percent higher than 19.56 billion euros last year. Revenues edged up 0.3 percent on a comparable basis.

In the second quarter, revenues were stable, while growth accelerated in Spain. In Europe, business was driven by the very high-speed fixed and mobile activities.

As of June 30, there were 22.7 million 4G customers in Europe and 2.5 million fibre customers. In one year, the company has doubled both fiber customer base as well as 4G customer base.

In France, there were 9.4 million 4G customers and net additions of mobile contracts were almost four times higher than sequential quarter.

Looking ahead, for the full year 2016, Orange confirmed that restated EBITDA will be higher than in 2015 on a comparable basis. This objective will be supported by continued commercial momentum, investment and efforts on the cost structure.

Further, the company said it plans to propose the payment of a dividend of 0.60 euros per share for 2016. An interim dividend for 2016 of 0.20 euros per share will be paid on 7 December 2016.

In Paris, Orange shares were trading at 13.98 euros, down 2.58 percent.