Orange sees net income in H114 down 70%

Orange said Q2 and H1 2014 numbers were good enough to keep its full-year target of margin stabilisation, but it was nonetheless another rocky three months for the operator as fierce competition and regulation continued to chip away at sales and profit.

Group revenue for the three months ended June 30 slid 3.4 per cent, to €9.78 billion (US$13.14 billion), compared with Q213. H1 sales were down 3.6 per cent, to €19.6 billion.

Reflecting the top-line pressures, H1 net income was down €318 million, to €891 million.

More encouragingly, H1 operating costs were cut by €511 million, off-setting 70 per cent of the revenue downturn over the six-month period.

Orange had originally planned to cut indirect costs by €250 million for the year, but as €213 million of savings have been already notched up in this area during H1, the full-year target was upped to €300 million. Indirect costs primarily relate to labour, advertising and property expenses.

Taking into account H1 figures, Orange confirmed the group target of achieving a restated EBITDA of between €12 billion and €12.5 billion for the full year.

Restated EBITDA for the first six months was €6.14 billion, translating into a margin of 31.3 per cent (unchanged from H113). Orange expects that margin to remain stable for the year.

The enterprise segment saw H1 sales fall by 2.7 per cent, to €3.14 billion. Primarily due to improved sales from IT and integration services, however, it was a much better performance than the 5.3 per cent decline suffered in full-year 2013.

Capex for the first six months, at €2.5 billion, was 3.1 per cent up on H113. This was due to increased investment in 4G and fibre access networks.