Vivendi says Q2 net income fell 3.5 pct but raises full-year outlook on future releases

Wednesday, September 1, 2010

Vivendi raises outlook despite dip in net profit

PARIS — French media company Vivendi SA said Wednesday that net income fell 3.5 percent in the second quarter due to fewer music releases from artists like Eminem and Lady Gaga, but it raised its full-year outlook as it expects strong results from video games and mobile services in emerging markets.

Vivendi executives said the Paris-based company was on track to post better results for the full year than in 2009 due to growth at Brazilian telecoms unit GVT and video games maker Activision Blizzard, the producer of “World of Warcraft.”

Vivendi shares opened up more than 4 percent to euro19.15 on the Paris stock exchange following the announcement before the open of trading.

The company behind Universal Music, Canal Plus television, and mobile phone division SFR said net profit dropped to euro1.06 billion ($1.34 billion) from euro1.1 billion in the second quarter. Revenue rose 6.2 percent to euro7.06 billion.

Underlying profit, which excludes most nonrecurring and non-operating items and is the measure watched most closely by financial analysts, fell 3.4 percent to euro790 million.

For the first six months of the year, Vivendi reported a 4-percent increase in adjusted net income to euro1.53 billion — a figure that outpaced analysts’ estimates polled by Thomson Reuters — and said earnings before interest, taxes and amortization rose 11.9 percent to euro3.24 billion.

Philippe Capron, the chief financial officer, told analysts on a conference call that the first-half results this year were “a bit dampened” but that Vivendi had already guided financial markets about the situation. The dividend of euro1.40 per share will be maintained.

Vivendi said fewer international releases and lower demand drove down Universal Music Group’s revenues by 5.4 percent to euro1.9 billion. Revenues in SFR’s mobile segment fell 0.3 percent to euro4.43 billion.

“We did not have a very exciting release schedule” in the first half, and releases were “heavily slanted” to the second-half, Capron said of the music division. “The business continues to cope with a very challenging environment.”

Vivendi also said a U.S. Supreme Court ruling in June was likely to limit the damages that it could be forced to pay in a class-action lawsuit against the company. The court ruled shareholders from stock transactions outside the United States “have no recourse” under U.S. securities law, Vivendi said.

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