Shares in Universal Music Group owner Vivendi (VIV) gained more than 10% Thursday after it posted better-than-expected results boosted by growth in digital music streaming and cost cutting.
Paris-based Vivendi posted Ebitda for the three months to the end of September of €277 million ($302 million), 26.5% up on the same period last year and well ahead of analyst expectations of about €170 million. Revenuesclimbed 6% to €2.69 billion for the quarter.
Vivendi shares traded Thursday at €20, up €1.93, or 10.7%, on their Wednesday close, making the company the top performer on France's CAC 40 index.
The results are a boost for Vivendi chairman and leading shareholder Vincent Bolloré who is reshaping the former media and telecoms conglomerate with the aim of creating a southern European media powerhouse combining music, television and film production and distribution and video games.
The overhaul remains a work in progress but is showing signs of success. A new focus on digital music sales booted Universal Music's pre-tax earnings to €174 million, up 75% on the same period last year and at constant exchange rates. Sales at the unit rose €1.31 billion, up 11.2%. Bolloré has overhauled management of the unit and refocused the business on the digital subscription market by striking a series of partnerships. These include Pandora Media (P) , iHeartMedia (IHRT) and Amazon (AMZN) .
"UMG (is) the highlight of the quarter," noted Goldman Sachs. "Streaming grew 68% in 3Q, more than offsetting the decline in downloads and physical (sales)."
Vivendi's Canal+ Group, which includes struggling French pay-TV operation Canal+, posted earnings of €139 million, down 14.5% year-on-year, on sales of €1.26 billion, down 2.1%. The unit is due to launch a new subscription channel next week. Bolloré is also cutting costs at the business and expects to have realized about €60 million to €80 million of annual savings by the end of the year, and a total €300 million by the end of 2018.
Vivendi also said it would accelerate the rate of release of video games from its new Gameloft business, which posted sales of €63 million over the quarter, the first quarterly result since its acquisition.
Vivendi said it intends to pay a dividend of €0.40 per share for 2016 and plans to continue to buy back shares if market conditions permit.