By Valentine Baldassari

(Reuters) -French conglomerate Bouygues on Thursday said it saw no direct impact on its business from the Ukraine conflict after reporting a smaller-than-expected first-quarter operating loss, but said there could be an indirect hit through material and labour costs.

Bouygues reiterated its outlook for higher 2022 sales and current operating profit, but said it remained “very vigilant” about the indirect consequences of the war.

“There is tension in the prices of a number of materials, (of) labour,” Chief Financial Officer Pascal Grange told reporters in a call.

He said the situation was leading to price rises and potential shortages. He also said that so far the situation had been handled without huge consequences for the group.

The construction, telecoms and media company reported a current operating loss of 77 million euros ($80.50 million), stable compared with the same period last year and smaller than analysts’ median estimate of a 90-million-euro loss in a company-provided poll.

The group said its planned acquisition of energy services group Equans from Engie and a plan to merge its TV arm TF1 with M6 were on schedule.

Bouygues aims to seal the Equans deal in the second half of 2022, while TF1 plans to combine with its rival by the end of the year.

Bouygues, which said its first-quarter results were not reflective of full-year performance due to seasonality, reported a 6% sales increase compared with the same period last year.

Regarding price increases for its telecom clients, Grange said there was a “necessary evolution of prices” in order to invest and have a quality network.

He added that Bouygues Telecom’s exposure to inflation was under control.

($1 = 0.9565 euros)

(Reporting by Valentine Baldassari; Editing by Christopher Cushing, Milla Nissi and Jane Merriman)