France's Vivendi Universal, rebounding after more than a year in disarray, has posted its first net profit since a new management team was brought in to resurrect the media and telecoms firm.
Vivendi, which has been divesting assets to cut debt, swung to a third-quarter net profit of euro131 million from a loss of euro1.23 billion thanks to earnings increases at most of its units, an exceptional gain and smaller losses related to running the holding company.
Operating profit rose 43 per cent on a pro-forma basis to euro896 million, well ahead of analysts' expectations of euro743 million. Sales fell 59 per cent to euro5.9 billion, the company reported last month.
The unexpected net profit was the latest sign Vivendi was on the mend after its former chief executive Mr Jean-Marie Messier led the company on a reckless expansion spree that saddled it with debt and brought it close to collapse.
New managers, led by Mr Jean-Rene Fourtou who joined in 2002, have sold billions of euros of assets to cut debt and slim down the company's once-sprawling array of businesses.
In a statement Vivendi said that despite a weak dollar, the performance of its businesses allowed it to reiterate its full-year targets for very strong growth in operating income, significant growth in cash flow from operations and a return to profit excluding non-recurring items and goodwill.
The company also said it had agreed on a new 2.7 billion euro unsecured credit line that would give it greater financial flexibility.
The company's debt fell euro900 million in the third quarter to about euro12.8 billion, putting it slightly ahead of its target for debt of about euro13 billion by year-end.
Vivendi shares, which are up 26 per cent so far this year and have outperformed the 15 per cent increase in the DJ Stoxx index of European media companies .SXMP , were up 0.2 percent at around 19.46 euros by 1125 GMT.
Universal Music, whose stable of artists includes Eminem and U2 as well as the recordings of John Coltrane and Herbert von Karajan, reported a 75 per cent fall in operating profit because of a weak market, free Internet music downloading and CD piracy.
The games division's loss widened to euro58 million from two million a year earlier because of lower gross margins, higher royalties and discounting.