French construction and telecoms conglomerate Bouygues SA (BOUYF) said net profit nearly doubled in 2016, easily exceeding expectations and sending the company's stock up more than 5% in early trading on Thursday.
Net profit hit €732 million ($772 million), up 82%, as its telecoms business returned to full year profit after a loss in 2015 and on robust margins at its construction operations. Company-collated analyst expectations had forecast net profit of €554 million on revenues of €31.68 billion.
Net profit excluding exceptional items, such as the sale of a stake in engineering group Alstom and some highway concessions, rose 29% to €632 million. Sales came in at €31.8 billion, down 2% year on year due to asset sales and negative currency effects.
Bouygues shares traded in Paris at €36.52, up €1.92 or 5.5% as investors reacted to particularly strong fourth quarter figures. Operating profit for the final three months of 2016 was €407 million, 20% higher than analyst consensus, said Goldman Sachs, which has a neutral rating on Bouygues and a 12-month price target of €35.50.
"All the group's sectors of activity contributed to this achievement by meeting or exceeding their targets," said Bouygues. The company also painted a positive outlook for the coming year, predicting continued improvement in its operating margin.
Bouygues Telecom, which had been the subject of bids of about €10 billion from French rivals Orange (ORAN) - Get Orange SA Sponsored ADR Report and SFR (NUMCF) , made an operating profit of €149 million, a €160 million turn around on its €11 million loss in 2015. Margins at the business rose to 23% up 3 percentage points on the prior year, reflecting an easing of pricing pressure that had undercut earnings at all of France's major mobile service providers.
The group's construction business made an operating profit of €879 million in 2016, up €48 million year-on-year, despite a 4% dip in sales to €25 billion due to negative currency movements and the sale of some Asian bitumen assets. The outlook for the unit looks strong with a record €30.2 billion of orders at the end of 2016, up 6% on the 2015 figure at constant exchange rates.
Bouygues said its year-end debt was €1.9 billion, down 27% on the 2015 figure.