First half 1998 results: a net income of 15.2 billion FF 1998 operating performance hit by unfavorable
conditions
BusinessWire, Thursday, September 17, 1998 at 10:45
PARIS--(BUSINESS WIRE)--September 17, 1998--On September 16,
1998, Serge Tchuruk, Chairman and CEO, presented the first half 1998
results and the outlook for the full year to the Board of Directors.
First half 1998 has been characterized by an excellent valuation
of the Alcatel assets sold in the framework of the Group's refocusing
on telecom markets. This results in substantial net earnings for
Alcatel as well as a strong increase in its financial strength. Income
from operations, which amounted to FF 2.3 billion, increased by 15%
compared with the first half 1997.
Concerning the outlook for the full year, orders and sales should
increase by approximately 10%. The Telecom segment's income from
operations, while growing over 1997, will be adversely impacted by the
sharp investment cuts recently decided by some traditional operators
and the deepening of the Southeast Asian and Russian crisis. After
reviewing the accounts and the currently available forecasts, Alcatel
anticipates that 1998 will not meet expectations in regards to the
Group's operating performance.
Nevertheless, the Group's medium-term objective for profitability
has not changed. To ensure that the momentum towards this objective is
fully resumed in 1999, the following actions will be implemented:
- Intensify growth strategy in key telecom markets, particularly
in the US, and in Internet related segments.
- Accelerate productivity improvement by adjusting company
resources to the contrasted evolution of market segments.
*T
First Half 1998 Group Results(a)
First Half First Half
(in FF billion) 1998 1997 restated
Orders 64.4 62.2
Sales 61.6 60.1
Income from Operations 2.3 2.0
Net Income 15.2 1.5
*T
(a) 1998 first half results reflect the Group's new structure
following the sale of Cegelec to Alstom and Alstom's subsequent stock
market listing in June. As of January 1, 1998, these two businesses
are consolidated under the equity method, therefore the sales, orders,
and income from operations are not included. 1997 figures have been
restated to reflect the above mentioned changes. In addition, as of
January 1, the new organization takes into account the transfer to the
Telecom segment of telecommunications activities linked to
telecommunications and toll and signaling systems, previously in the
Engineering and Systems segment (ALCO, Siette, CGA).
Net sales in the first half 1998 increased by 2.5% to FF 61.6
billion compared with FF 60.1 billion for the corresponding period in
1997. On a comparable basis and at constant copper prices, sales
increased by 5.3%.
Orders increased 3.5% during the first half to FF 64.4 billion
compared with FF 62.2 billion in 1997. On a comparable basis and at
constant copper prices, orders increased by 5.8%.
Income from operations increased by 15% to FF 2.3 billion
compared with FF 2.0 billion in the first half 1997. Its progression
has, however, been limited by the impact of a slowdown in Telecom
sales in the second quarter 1998.
Net income amounted to FF 15.2 billion compared with FF 1.5
billion in the first half 1997. This figure takes into account an
exceptional pre-tax FF 13.7 billion capital gain resulting from the
sale of Cegelec to Alstom and Alstom's subsequent stock market
listing.
The Group has significantly improved its already solid financial
structure, with gearing (net debt/shareholders' equity) decreasing to
3% in the first half 1998 compared with 27% at December 31, 1997, due
to the increase in Shareholders' equity which amounted to FF 65.3
billion compared to FF 44.0 billion at the end of December 1997. This
amount does not include the FF 5.3 billion additional equity coming
from the conversion of convertible bonds which occurred in July and
August.
*T
Segment Analysis
Telecom
First Half First Half
(in FF billion) 1998 1997 restated
Orders 44.1 42.5
Sales 40.9 38.6
Income from Operations 0.8 0.6
*T
Net sales in the first half 1998 increased by 6.5% on a
comparable basis and amounted to FF 40.9 billion compared to FF 38.6
billion for the first six months of last year.
Income from operations increased to FF 810 million compared with
FF 591 million in the first half 1997.
Growth was sustained in transmission systems, both terrestrial
and submarine, as well as in GSM handsets. Alcatel business continued
to expand at a rapid pace in the U.S. These contributions compensated
the slowdown in switching and access, which now appear to be lasting
cuts in the investment programs of some traditional operators.
*T
Cables and Components
First Half First Half
(in FF billion) 1998 1997 restated
Orders 25.2 22.5
Sales 23.7 23.6
Income from Operations 1.3 1.3
*T
Net sales in the first half 1998 increased by 0.4% to FF 23.7
billion. On a comparable basis and at constant copper prices, the
increase amounted to 8 %. Income from operations remained stable in
the first half 1998 and amounted to FF 1,310 million compared with FF
1,269 million a year ago.
This performance occurred in a difficult environment
characterized by high pricing pressure, especially in fiber optic
cables, which was compensated by productivity gains and growth in
volume.
"Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995: This press release contains forward-looking
statements relating to the Group's expectations regarding sales and
orders for the full year 1998 and the medium-term outlook for
profitability. Such expectations assume (i) that sales and orders will
not be lower than anticipated, (ii) that sales and orders will not be
affected by unexpected factors including a change in market conditions
in 1998 and (iii) the Group's ability to achieve its profitability
objectives. Actual results could differ materially from the above as a
result of these or other factors.
CONTACT: Press Office, alcatel.com
Christophe Lachnitt, Tel : (33.1) 40 76 12 19
christophe.lachnitt@alcatel.fr
Jean-Christophe Huertas, Tel: (33 1) 40 76 11 79
jean-christophe.huertas@alcatel.fr
or
Investor Relations, alcatel.com
Claire Pedini, Tel: (33.1) 40 76 13 93
claire.pedini@alcatel.fr
Charlotte Laurent-Ottomane, Tel:(33.1) 40 76 13 30
ottomane@ahqps.alcatel.fr
KEYWORD: NEW YORK
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED
INTERACTIVE/MULTIMEDIA/INTERNET TELECOMMUNICATIONS EARNINGS
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