a net profit weighed down by 25% by the pension reform

2023-07-26 20:17:41

By publishing its results for the first half, the French telecom giant appears confident. “The acceleration of revenue and EBITDAaL growth confirms the achievement of the 2023 annual objectives”, indicates Orange in a press release published this Wednesday, July 26.

The Orange group’s turnover increased by +2% over the first six months of 2023, for a total of 21.545 billion euros. And the gross operating surplus after rents (EBITDAal), the group’s main profitability indicator, was almost stable (+0.8% on a comparable basis), to reach 5.895 billion euros.

“The growth in EBITDAaL demonstrates the Group’s ability to reduce inflationary pressure thanks to its value strategy and strict cost discipline”, believes the group.

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Net profit down sharply by -25.8%

However, there remains a shadow on the table: the drop of 378 million euros in historical data in net profit compared to the first half of 2022. It thus stands at 1,088 million euros, down -25.8%.

This is mainly due to the fall in operating income (-11.2%), due in particular to the “recognition of an additional provision related to the Senior Part-Time (TPS) schemes of 257 million euros to take into account the pension reform enacted in April 2023 in France”, Orange said.

Following the publication of these results, Orange confirmed its objectives for the full year. And in particular that of “slight growth” of EBITDAal, presented when the strategic plan was announced in February. For 2023, the group also confirms the objective of an organic cash flow (cash flow) from telecoms activities of at least 3.5 billion euros.

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Growth still driven by the Africa and Middle East zone

With growth of 10.5% over one year, the Africa and Middle East region is still the main driver of growth in the group’s turnover. In France, its main market, revenues fell by 1.5% in the first half, weighed down by the fall in services to operators (-7.9%) despite the growth in turnover from retail services (+1, 3%).

In Europe, where Orange is present in seven countries, sales jumped 3.3% in the first half, driven by retail services. The turnover of Spain confirms its return to growth in the second quarter (+2.1%), while the French operator hopes to finalize in the second half of its project to merge its Spanish subsidiary with MasMovil. A rapprochement that could have negative effects “considerable” for competition, leading in particular to possible “substantial price increases”according to the European Commission.

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Voluntary departure plan on the business part

The gross operating surplus after rents (EBITDAal) of the branch dedicated to companies (Orange Business) fell back by -16.7%, while Orange management is considering the elimination of around 670 positions within its historical activities in France.

Orange Business wants to propose a collective conventional break, which requires obtaining a majority agreement with the trade unions. This voluntary departure plan “should only significantly improve EBITDAal from 2024”, warned Orange on Wednesday.

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This branch of the operator that serves businesses is suffering enormously in the wake of a profound change in usage, with a drop in the supply of fixed telephony and private networks. As Orange announced in February, it will undergo a major restructuring, and a « important » cost reduction plan, with the objective of a return to growth and profitability “no later than 2025”.

(With AFP)