(Updates with share price in fifth paragraph.)
Oct. 24 (Bloomberg) -- Gecina SA, the French property company that fired its chief executive officer earlier this month, reported an 8.5 percent decline in earnings for the first nine months as borrowing costs rose.
Profit excluding disposals and asset value changes, known as recurrent income, fell to 239.8 million euros ($333 million), or 3.93 euros a share, from 261.9 million euros, or 4.30 euros, a year earlier, the Paris-based company said in a statement today. The company didn’t provide figures for the third quarter.
Chairman Bernard Michel replaced Christophe Clamageran as chief executive on Oct. 4 following a clash over acquisitions and debt reduction. Michel plans to speed up cuts in borrowing and sell assets, particularly apartments in the Paris region, to raise 1.5 billion euros. The company today repeated a forecast that rising borrowing costs would cause recurrent income to fall by 7 percent this year.
“The world of real estate companies has changed significantly because of the sovereign debt crisis, its repercussions on the banking system as well as the slowdown in the American and European economies,” the company said in the statement.
Gecina rose 46 cents in Paris trading to 69.06 euros as of 9:13 a.m. The stock has fallen 16 percent this year, giving the company a market value of 4.42 billion pounds.
Gecina’s average cost of borrowing rose by 75 basis points to 4.15 percent, lifting its financial expenses by 34 percent to 143 million euros. A basis point is 0.01 percentage point.
The company said today that it will step up disposals to cut debt to 40 percent of the value of its assets through 2012 from 43.9 percent at the end of June.
This year, Gecina aims to raise 1 billion euros from asset sales. The company raised 647 million euros in the first nine months with an additional 155 million euros of sales agreed to but not completed.
By the first half of next year, Gecina aims to sell an additional 500 million euros of assets, mostly of Paris apartments.
Clamageran joined Gecina in November 2009 and sought to increase Paris-region office projects and developments by 80 percent to 9 billion euros by 2014. He clashed with the board, which wanted him to prioritize debt reduction as the sovereign debt crisis reduces demand for office space.
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