Bouygues posts surprise operating profit aided by Equans, price hikes

By Diana Mandia and Michal Aleksandrowicz

(Reuters) -French construction-to-telecoms conglomerate Bouygues on Tuesday said its operating result swung to a surprise profit in the first quarter, supported by last year's Equans acquisition and inflation-related price increases.

The October acquisition of Engie's former services unit marked a strategic shift for family-owned Bouygues, which was already present in the civil engineering, construction, media and telecoms sectors and wants to grow in energy transition and services.

Price increases helped the group report a 46% year-on-year jump in quarterly sales to 12 billion euros ($13.2 billion), above analysts' forecast of 11.74 billion euros in a company-compiled poll.

"Our policy is one of risk limitation," Chief Financial Officer Pascal Grangé told reporters. "It is either to transfer the risk to our customers with protective contracts, or to transfer it in part to our suppliers or to our supply chain in general."

Bouygues reported a current operating profit from activities of 9 million euros for the first quarter, compared with a loss of 66 million euros a year earlier. Analysts had expected a loss of 2 million euros.

However, the company said the order backlog of its real estate business Bouygues Immobilier was 20% lower than in the first quarter of 2022, as customers stayed in a wait-and-see mode amid inflation and rising interest rates, especially in France.

Meanwhile, the market in Poland is "quite excellent" due to growing housing needs driven by migration flows from war-torn Ukraine, Grangé said.

Bouygues, which is present in more than 80 countries and has around 200,000 employees, confirmed 2023 outlook both on group level and for its business units.

Shares had fallen 2.5% at 0740 GMT.

($1 = 0.9084 euros)

(Reporting by Diana Mandiá and Michal Aleksandrowicz in Gdansk; Editing by Milla Nissi and Ed Osmond)