November 16, 2016 / 11:37 AM / 2 years ago

UPDATE 2-Bouygues eyes boosts from Trump infrastructure plan next year

* Operating profit rises in Q3, beating forecasts

* Eyes growth from U.S., Canada infrastructure plans

* Shares up nearly 5 pct, leading CAc-40 gainers (Recasts with deputy CEO comments, shares)

By Dominique Vidalon and Gilles Guillaume

PARIS, Nov 16 (Reuters) - Bouygues said its construction business would benefit next year from President-elect Donald Trump’s plans to raise spending on infrastructure in the United States while its telecom arm would boost profit margins as promised.

For this year, the family-controlled group, which also builds roads and owns France’s biggest private broadcaster TF1 , stuck to its pledge to improve profitability after it delivered a forecast-beating rise in third quarter operating profit, helped by an improving performance at Bouygues Telecom.

Trump, who last week unexpectedly defeated Democrat rival Hillary Clinton in the U.S. presidential race, is planning $1 trillion of infrastructure spending to boost the economy, relying entirely on investment from the private sector.

Trump’s plan comes as the Canadian government is also seeking billions of infrastructure investments.

“We anticipate good news for the future in the United States and Canada. Now we have to see how they implement that,” deputy chief executive Philippe Marien told a conference call.

North America makes up some 21 percent of Bouygues’s construction business abroad. Trump’s plan would start benefiting Bouygues’ road building unit Colas in 2017 with a stronger effect seen in 2018 and 2019, he said.


Bouygues said third quarter current operating profit rose by 6 percent to 508 million euros while revenue eased 3 percent to 8.44 billion euros ($9.1 billion).

Analysts had expected an operating profit of 430 million euros and sales of 8.604 billion euros, based on the median estimates in a Thomson Reuters poll of nine analysts.

By 1034 GMT Bouygues shares gained 4.84 percent, outperforming a 0.2 percent decline in the French CAC-40 index of blue chips.

Bouygues reported improving profitability at its telecoms unit, France’s third-biggest mobile operator, which it tried but failed to merge with market leader Orange in April.

France’s telecoms sector, hit by a price war following the entrance of low-cost player Iliad in 2012, has been awash with takeover speculation since then.

But Bouygues Telecom has said it can prosper on its own and has responded with a turnaround plan including job cuts and a focus on the rollout of its 4G network and fixed-line broadband.

“Now the market is clearly made of four operators... we think we are in line with our strategy and delivering what we have promised,” Marien said.

In the nine-months to September 30, Bouygues Telecom’s operating earnings reached 124 million euros compared with a loss of 9 million euros in the same period last year.

The telecoms division added 93,000 fixed-line phone customers and 227,000 mobile customers in the third quarter.

The group kept an EBITDA margin target of 25 percent for Bouygues Telecom in 2017, having achieved 23.1 percent in the first nine months of 2016.

The goal also remains for a gradual year on year increase in the free cash flow of Bouygues Telecom.

$1 = 0.9305 euros Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Alexandra Hudson

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