PARIS (Reuters) – Shares of Orange SA fell sharply on Thursday on investors’ concerns about its business services unit, whose profits fell sharply in the first half of the year.
The group’s share fell 2.58% at 10:50 am, one of the biggest drops in the CAC 40 index, after the release of results broadly in line with market expectations in the second quarter.
The group said its Enterprise division’s EBITDAaL fell more than 25% in the first half of the year compared to a year ago, heightening concerns about its ability to meet full-year earnings targets, whether or not the group confirmed this.
“They are slightly behind their full-year EBITDAaL guidance, which could be a source of concern about their ability to meet the full-year target,” said Stefan Beyazyan, analyst at Oddo BHF.
Core operating income (EBITDAaL) increased by 0.5% to €3.31 billion in the second quarter compared to the previous year. Orange reiterated its growth target of 2.5% to 3% in this area.
Orange is struggling to return to growth in its two largest markets, France and Spain, where competition is fierce and where it has to invest heavily in fiber.
The group’s Spanish business has been suffering from profits for some time now. Orange is looking to improve results in Spain from next year, helped by a €18.6bn merger between its Spanish operations and MasMovil’s.
New CEO Christel Heidemann will present a new strategic plan in February 2023.
(Written by Jean-Michel Belo with input from Mathieu Rosemin, edited by Nicolas Delame and Sophie Louet)