Vivendi Shares Rise After 3Q Revenue Beats Expectations
16 November 2018 - 10:11PM
Dow Jones News
By Pietro Lombardi
Shares in Vivendi SA (VIV.FR) gained significantly Friday after
the company reported better-than-expected third-quarter revenue on
the back of a strong revenue performance at its Universal Music
Group.
The media conglomerate's third-quarter revenue rose 5.5% on year
to 3.38 billion euros ($3.82 billion), beating expectations of
EUR3.29 billion, according to a consensus provided by FactSet.
Revenue grew 13% at the Universal Music Group unit, a
performance that Deutsche Bank analysts said served as a reminder
of "why it is such a valuable asset."
UBS also highlighted the performance of the unit, saying the
"results confirm our positive stance on UMG with organic growth
momentum positive and margin expansion underpinning our EUR22
billion UMG valuation."
With the results, the media conglomerate also gave further
details on its plan to sell up to 50% of UMG, a deal it expects to
be cash-only. Vivendi said it could use the proceeds from the sale
to fund a "significant" share-buyback program and for
acquisitions.
"About 15 banks were chosen for the bank selection process. The
banks could help Vivendi identify one or more strategic partners
for its subsidiary Universal Music Group," Vivendi said
Thursday.
The company plans to select five to seven banks, and said that
UMG's full-year results, due in February 2019, "will serve as a
basis for the discussions with potential partners."
Aside from UMG, Vivendi's Havas unit also delivered a solid
showing with revenue of EUR535 million. This "surprised
positively," UBS said, noting that Havas's "organic growth was
positive for the first time since Q317."
At 1027 GMT Vivendi shares traded 4.1% higher.
The results showed that there are some clouds hanging over
French pay-TV group Canal+, Bryan Garnier said. Revenue at the
business fell 0.5% on year.
Despite the uncertain outlook for Canal+, the French bank still
expects Vivendi stock to react positively to the third-quarter
figures, mainly due to UMG.
In the wake of the dismissal of Telecom Italia SpA's (TIT.MI)
CEO, the French company confirmed its long-term commitment to the
Italian group.
Vivendi is a "long-term shareholder in Telecom Italia and we are
going to stay as such," Chief Executive Arnaud de Puyfontaine said
in a call with analysts after the results.
Mr. de Puyfontaine, who is also on TIM's board, said the issue
is "very serious" and dismissed rumors of a stake sale.
With a holding of almost 24%, Vivendi is TIM's main shareholder.
It has been locked for months in a fight with Elliott Management
Corp. over the company's strategy and board. The dismissal of
former TIM chief executive Amos Genish earlier this week marked the
latest blow in the ongoing struggle for influence at the
company.
The battle over TIM is weighing on Vivendi, equity research firm
CFRA said, cutting its target price on the French conglomerate's
stock.
"We think our valuation is justified considering the multiple
controversies the company is involved in," CFRA said.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
November 16, 2018 05:56 ET (10:56 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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