French telecom equipment maker Alcatel-Lucent SA (ALU) Thursday reported a narrower loss for the third quarter, reflecting improved margins due to better profitability in several business lines as well as favourable mix. Revenues fell about 6 percent from last year. The shares were up more than 10 percent in Paris.
The group said it had 73 million euros of fixed cost savings in the quarter to bring total cost savings to 645 million year-to-date, which is two-thirds of its target under the Shift Plan objective.
Michel Combes, CEO of the company stated, "Since the launch of The Shift Plan, our primary objective is to enable the company to generate free cash flow on a sustainable, recurring basis, starting in 2015. Our third quarter results show that we are increasingly improving our underlying profitability, an important step towards this commitment."
Profitability of both Core Networking and Access segments continued to improve with adjusted operating margin expanding by 230 basis points and 100 basis points, respectively.
For the third quarter, net loss, Group share, was 18 million euros, or $22.67 million, narrower than 200 million euros in the previous year.
The company said it has re-presented its 2013 figures to reflect accounting of Enterprise as a discontinued operation from the first quarter of 2014.
Adjusted net loss, Group share, narrowed significantly to 9 million euros from last year's loss of 186 million euros.
Adjusted operating income stood at 170 million euros, compared to 113 million euros last year.
Revenues for the quarter declined 5.9 percent to 3.25 billion euros from 3.5 billion euros in the preceding year. Revenues for the Group excluding Managed Services, reflecting the termination or restructuring of loss-making contracts, declined 3.8 percent.
Core Networking segment revenues were 1.44 billion euros, down 3.9 percent from last year. Access segment revenues fell 7.5 percent to 1.81 billion euros.
Gross profit margin expanded 210 basis points year-over-year to 34.0 percent from 31.9 percent.
In addition to operating income improvement, the results reflected lower restructuring costs, a decrease in financial expenses compared to the year-ago quarter and post-retirement benefit plan amendments totaling 103 million euros.
SG&A expenses fell 13.6 percent from a year earlier. Restructuring costs were 75 million euros, down from 113 million euros last year.
In Paris, Alcatel-Lucent shares climbed 10.42 percent to trade at 2.25 euros.
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