Thursday May 15, 10:22 AM
BT Q4 results ahead; outlook upbeat UPDATE
(Recasts, adds detail, share price, analyst comment)
LONDON (Thomson Financial) - BT Group PLC (LSE: BT-A.L - news) 's. transformation from a UK fixed-line monopoly to a global provider of telecoms and IT services helped the group to fourth quarter results ahead of forecasts and an upbeat outlook, as outgoing chairman Ben Verwaayen signed off his last results with an increased dividend and pension surplus.
The group reported fourth-quarter revenues up 2 percent to 5.422 billion pounds, ahead of the consensus forecast of 5.302 billion pounds.
Revenues from BT's 'new wave' non-traditional IT and broadband services rose 9 percent compared to last year, offsetting a 2 percent decline in its traditional voice business, as the company continued to suffer competitive pressure and the fallout of the premium-rate phone-in scandal last year.
Pretax profit before specific items and leavers rose 3 percent to 714 million pounds.
Leaver costs, one-off restructuring costs and the group's Openreach
obligations pulled pretax profit after specific items down 18 percent to 494 million pounds.
Full-year sales also rose 2 percent to 20.704 billion pounds, and pretax profit before specific items was flat at 2.506 billion pounds.
Collins Stewart (LSE: CLST.L - news) called the results 'strong' and said that BT had again delivered a full year of free cash flow in the fourth quarter. Free cash flow rose 9 percent in the quarter to 1.7 billion pounds compared with the year-ago period.
'Combined with a pension surplus, better revenue growth than expected and a top-end final dividend, we believe these results will be well received,' the broker said.
At March 31, BT's pension scheme was in surplus to the tune of 2.1 billion pounds, compared with a deficit of 0.2 billion pounds in the same period of last year, mostly due to a change in the bond rate used to calculate liabilities, although the assets in the scheme fell by 1 billion pounds in the year to 37.3 billion at March 31, 2008.
BT expects net pension income to fall to 313 million pounds next year from 420 million pounds this year, but despite this lower contribution, the company still expects to grow earnings per share in the coming year.
The group upped its full year dividend by 5 percent to 15.8 pence per share.
Verwaayen's last results before he hands over the reins to former BT Retail chief Ian Livingston pleased the market, and BT shares were up 2.69 percent or 6 pence to 229-1/2 at 9:52 a.m.
BT also said it sees a further 700 million pounds of cost savings generated from its continuing efficiency drive, in addition to the 625 million pounds of cost savings achieved in the full year.
The company said it expects capital expenditure to fall to 3.1 billion pounds in 2008 to 2009 from 3.34 billion in the 2007 to 2008 financial year.
By division, BT's global services was again the star performer, with revenues up 10 percent to 2.226 billion pounds in the fourth quarter and EBITDA before leaver costs up 13 percent to 304 million pounds.
Fourth quarter margins at the division rose 0.4 percent to 13.7 percent, as the group moved closer to its 2010 target of 15 percent margins.
Once again wholesale was the main drag on BT's otherwise improved divisions.
Wholesale revenues have been declining, as BT opens up its network to competitors through local loop unbundling -- where other operators put their own equipment into BT exchanges -- and this is compounded by a sharp decline in the use of scandal-hit premium rate phone-lines, which impacts BT's transit revenue.
Wholesale revenue fell 12 percent to 1.18 billion pounds, while EBITDA pre-leavers fell 14 percent at 320 million pounds.
BT's retail operations saw a 2 percent rise in sales to 2.158 billion and an 8 percent uplift in EBITDA pre-leavers to 391 million pounds.
Broadband is Retail's central growth driver, offsetting a decline in traditional revenue, which is under increasing competitive pressure.
Broadband revenues rose 25 percent in the fourth quarter, and the group added 150,000 net new customers to its broadband stable, bringing the total at March 31 to 4.4 million customers.
BT's share of new UK broadband users, excluding cable households, was 30 percent in the period.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
