Vivendi rises after improving profit forecasts and reassuring over buys

 
Steve Dinneen
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Vivendi, Europe’s largest telecom and entertainment group, yesterday raised its profit targets on the back of forecast-beating first-half results.

The firm also reassured investors on its acquisition strategy, lifting its flagging stock.

Vivendi shares have slid to seven-year lows relative to the European market, largely underperforming peers on concerns about acquisitions, the cost of a US class-action lawsuit and intensifying competition in the French telecom sector.

But chief executive Jean-Bernard Levy sought to turn the page yesterday, pledging to maintain or raise its dividend through 2012, confirming plans to buy out minority shareholders in its French telecom and pay-TV units and playing down legal risks.

He said: “Vivendi is back to growth in the first half of 2010 and improves its full-year outlook.”

First-half operating profit rose 12 per cent, driven by growth at French telecom operator
SFR and its latest acquisition, Brazilian fixed-line telecom operator GVT.

One Paris-based analyst said: “Today’s release gives confidence and visibility on the company’s businesses and confirms the fundamentals. Investors should also be comforted by the comments on the lawsuit and acquisitions like SFR.”

A London-based analyst agreed: “Improving earnings momentum and the likelihood of an SFR buyout drawing nearer should push the shares higher.”

Vivendi raised its 2010 guidance to an “increase” in Ebitda, compared with a previous forecast of “slight growth”. It also gave guidance on its adjusted net income for the first time, forecasting it would rise from €2.59bn (£2.15bn) in 2009.

First-half operating profit rose to €3.24bn.