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Bouygues Group profits hit by French telecoms price war

Bouygues Group saw operating profits drop 37 per cent in the first half of the year as its French telecoms division suffered the fall out from a price war.

The group – whose subsidiary Bouygues Construction owns Bouygues UK – reported a 2 per cent rise in sales to €15.5 billion (£12.28bn) to the end of June 2012. But operating profit slumped from €752m (£596m) to €476m (£377.2m), and net profit was down 29 per cent from €491m to €278m.

The figures come after Bouygues UK reported pre-tax profits falling by half in 2011 as turnover dropped by almost a third.

The Bouygues Group has launched a €300-million adjustment and savings plan and redundancy programme covering 556 employees at Bouygues Telecom as it faces ‘deep-seated changes on the mobile market’ and following the departure of 71,000 customers in the second quarter.

It comes after a price war which saw IIiad launch Free Mobile, impacting three big providers including Bouygues, France Telecome and Vivendi’s SFR. Bouygues Telecom opearting profits fell 55 per cent to €148m.

Bouygues Construction posted a ‘good commercial performance’. First half sales were up 7 per cent to €5bn, including 2 per cent in France and 13 per cent on international markets.

Operating margin was 3.2 per cent, with profits down 1 per cent from €165 to €163m.

The order book stood 14 per cent higher than at end-June 2011 at €17.7bn, after it took orders worth €6.9 billion in the first half of the year, up 12 per cent. It said international markets accounted for 46 per cent.

Colas – which has a roads and rail business in the UK - reported an overall 4 per cent increase in first-half sales to €5,594 million, down 3 per cent in France and up 15 per cent on international markets. The current operating loss stood at €34 million and net loss at €19 million, compared with €0 and €2 million profit respectively in the first half of 2011.

The order book was up 9 per cent to €7.9 billion (up 11% in mainland France and 7% in French overseas territories and international markets).

Bouygues Group’s net debt rose from €4.3bn to €6.2bn.  The group order book was 13 per cent higher than at end-June 2011 at a new record level of €28.6 billion.  Net debt rose from 4.3bn to 6.2bn.

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