Bouygues (BOUYF) shares surged to the top of the French market Wednesday as the construction and telecoms conglomerate posted better-than-expected third-quarter earnings and investors bet on further gains from a potential boom in U.S. infrastructure spending under the Trump administration.
Bouygues made an operating profit of €508 million ($545 million) over the three months to the end of September, up €30 million or 6.3% on the same period last year. The result was 6.7% ahead of the company-compiled analyst consensus, primarily due to faster than forecast sales and earning growth at the group's telecom unit.
Bouygues shares jumped 4.9% Wednesday to trade at €31.61, adding to a three month rally that has lifted the stock just over 13%.
Group sales over the quarter fell to €8.44 billion, down 1.5% on analyst consensus expectations, as the group's road construction unit Colas disappointed. Colas sales over the third quarter were €3.42 billion, down from €3.7 billion over the same period in 2015, while the wider construction operations, including Colas, Bouygues Construction and Bouygues Immobilier, posted sales of €6.8 billion over the third quarter, down from €7.15 billion last year.
The dip in Colas revenues may be reversed if President-elect Donald Trump's delivers on his promise of a massive increase in spending on U.S. infrastructure, according to Bouygues.
Trump has proposed an investment of $550 billion in transport infrastructure claiming on his website that the U.S.' roads, airports and subways are "literally falling apart."
The plan was "excellent news" for Colas, said CEO Philippe Marien on a call with reporters.
North America accounts for about 21% of the Bouygues construction unit sales. The region has lagged growth in Bouygues other international markets, notably Northern Europe, Asia and the Middle East, which have helped boost the company's project's pipeline by 28% over the first nine months of this year.
Bouygues Telecom, France's No.3 mobile operator, posted a third-quarter current operating profit of €86 million, up 91% on the same period last year. Bouygues said it added 227,000 mobile phone customers in the third quarter, boosting revenues by 7% to €1.21 billion from €1.16 billion in the same period in 2015.
Bouygues Telecom has been cutting costs after hopes of a takeover or merger with a rival has dimmed. The unit was in talks earlier this year with French market leader Orange (ORAN) but failed to come up with an agreement, while in June last year it received and rejected a €10 billion bid from France's No.2 player SFR.