Vivendi Posts Weak Sales

The second quarter shows a sharp decline -- but don't forget, the group 'perimeter' has changed.
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Vivendi

(V) - Get Report

posted weak second-quarter sales Thursday, citing the effect of the softening dollar, but maintained 2003 financial guidance and emphasized its continuing debt-reduction efforts.

The company, which is in the midst of a slow-moving auction of its U.S. entertainment assets, said sales for the quarter ended June 30 dropped sharply from a year ago. Consolidated revenue plunged to 6.13 billion euros ($7 billion) from 15.34 billion euros a year earlier. On a pro forma basis, excluding businesses since divested and exchange-rate fluctuations, the latest quarter showed a 6% top-line decline.

Vivendi noted that "the Group perimeter has fundamentally changed within the last 12 months" as the French company took measures to sell off businesses outside its core telecommunications and pay TV focus. In the latest quarter, telecommunications and pay TV contributed "a good performance," Vivendi said, but entertainment revenues suffered from currency movements and revenue declines at the Universal Music Group and Vivendi Universal Games.

Meanwhile, the company trumpeted the balance sheet-restoring efforts that have so occupied new CEO Jean-Rene Fourtou. Vivendi pointed out that it has trimmed its debt load to 13 billion euros from 35 billion a year earlier. Vivendi's former leader, Jean-Marie Messier, turned the company from a sleepy water utility into an ambitious multimedia conglomerate, but nearly at the cost of the company's financial strength. Messier was forced out last summer and Fourtou came on board to clean up the mess.

On Thursday, Vivendi shares slipped 23 cents to $17.59.