Vivendi SA (VIVDY.PK)

Q2 2011 Earnings Call

August 31, 2011 3:00 AM ET


Jean-Bernard Levy – Chairman

Philippe Capron – CFO

Pierre Trotot – Senior EVP

Julien Verley – EVP, Finance


Conor O’Shea – Kepler Capital Markets

Russell Warner – K Street Research

Filippo Lo Franco – JP Morgan

Thomas Singlehurst – Citigroup

Patrick Kirby – Deutsche Bank

Ian Whittaker – Liberum Capital

Michel Grandscheau (ph)

John Karidis – MF Global

Giasone Salati – Execution

Matthew Walker – Nomura


TheStreet Recommends


» Vivendi Management Discusses Q1 2011 Results - Earnings Call Transcript
» Vivendi CEO Discusses Q4 2010 Results - Earnings Call Transcript
» The Cooper Companies CEO Discusses F3Q11 Results - Earnings Call Transcript

Good morning ladies and gentlemen. Welcome and thank you for joining us today for Vivendi’s First Half 2011 Earnings Meeting. With me today are Jean-Bernard Levy, Chairman of the Management Board and Chief Executive Officer and Philippe Capron Member of the Management Board and Chief Financial Officer.

This meeting is webcast on where the slides are available for download. And I would like to remind you to read the legal disclaimer at the end of the presentation on page 51. This meeting will be in English with a simultaneous translation. And as usual we will leave time for the Q&A at the end of the presentation.

The first half 2011 financial report will be available on our website later this afternoon. And you’ll be able to access a replay of this call for 15 days also on our website.

And now, I would like to introduce our CEO, Jean-Bernard Levy. Thank you.

Jean-Bernard Levy

Thank you, Jean-Michel. Welcome, good morning to all of you. I’m happy to be once again reporting our numbers and good numbers. So, I have a smiling face this morning for those who are just listening. Few highlight for the first half of 2011. First, as all of you know I’m sure, we have finally completed simplification of Vivendi. We told, I think in very good conditions, 20% we owned for several years in NBC Universal and we acquired, I believe also a very good condition, 44% of SFR so that today, we have no minority stake and we have full 100% of our major business, major contributor which is SFR.

Our operating numbers are good, while the business environment is obviously very challenging, our sales are up and our profits are up.

Adjusted net income increased 20%, this is a number which is high number. It is driven by very good operating performance especially Activision Blizzard and at GVT in Brazil. But also with tax effect on our earnings which results from the acquisition of 44% of SFR. And we these good operating numbers, we are happy to confirm our full year outlook for 2011.

Obviously this first half has meant very major milestone for Vivendi. We finalized in two steps, end of last year and beginning of this year with disposal of our minority stake in NBC Universal at the multiple of roughly 12 times the EBITDA of 2010. At the same time only a few weeks later, we made a deal with Vodafone to buy the minority with a strong minority of 44% stake they own for many, many years in SFR at a much lower multiple of hardly above six times the 2010 EBITDA.

Basically this one was completed very quickly in the middle of June. It was announced at the beginning of April and as you know, it gives us a lot of benefit in terms of accretion, in terms of full control of our assets, in terms of better access to cash flow and of course with different benefits which stem from more leveraged balance sheet. So, today all our operations are under exclusive control.

Few words about our operating performance. Of course, Philippe will give you a more color on this in a few minutes. Our revenues grow 1.9% as reported and slightly above 2% at constant currency. Our EBITDA grew 3.7% as reported and slightly lower than 5%, 4.6% exactly at constant currency.

Our cash flow excluding NBC contribution and the one off acquisition of spectrum for SFR that we had in the first half of 2010, our cash flow went down by a mere 2.4%. Activision Blizzard and GVT results have fueled with the growth of Vivendi and are clearly above our own expectations. The contribution in EBITDA of Activision Blizzard is up 40% at constant currency and the EBITDA of GVT is up 46% at constant currency rate. So, these are very impressive numbers.

We are very happy with this especially as these are the two very major decisions we’ve made in terms of business investment, new business, new countries of consoled business for video games, getting into the Brazilian telecom landscape a couple of years ago and I think we are rewarded with really astonishing numbers.

Adjusted net income as I said for H1 is up slightly above 20%. This is due to both the strong operating performance and to the positive stack impact of the acquisition of SFR. But, please do not consider that this 20% growth is sustainable in the second half. Some of the tax benefits especially will not be the same and this translates into the guidance.

I’ll say a few words about each business because I believe specially those who are not listed its important. To give you as much as we can to make you familiar with the business and the performance. Starting with video games business and Activision Blizzard, they have already reported the numbers of course in non-GAAP and in GAAP. In IFRS, the contribution in the first half of course, it’s the major part of the contribution for the year is up 34% when compared to last year and this is as you know to the excellent sales of the Christmas season as the end of last year, which translates into profit deferred as per the accounting rules into the next month. And so, this contribution in EBITDA is at 100%, €833 million, quite an important number I’m sure when you think about the video games business of Vivendi was a few years ago.

But, not only did we have the benefit of the strong sales of the Christmas season of 2010, we also had very strong carryover sales into the first half of 2011 and especially with the astonishing performance of the Call of Duty, Map Pack which we sold, we relieved and sold during the first half.

We also expect the second half to be very rich in terms of pipeline of new gains and you have the here the list of what we are expecting for the second half and into 2012 and 2013 and Activision Blizzard is well balanced with fantastic properties and franchises that are giving us recurring profit and also a lot of investment into new properties so that this will fuel like bungee, the like the new Diablo product. It’s more than 10 years since we had the Diablo product that will fuel the profits for the next few years.

With this, we raise the 2011 EBITDA guidance to above 800 million which is more than 100 million above the previous guidance.

Read the rest of this transcript for free on