Thursday July 30, 10:44 AM
BT profits dive as shares rise on positive outlook
LONDON (AFP) - British telecoms operator BT Group (LSE: BT-A.L - news) said Thursday that net profits plunged 44 percent in the first quarter of its financial year due largely to its badly-performing Global Services unit.
Net earnings sank to 214 million pounds (251 million euros, 353 million dollars) in the three months to June, compared with 382 million pounds in the same period of last year, BT said in a results statement.
Revenues edged up one percent to 5.24 billion pounds.
BT revealed in May that it would axe 15,000 jobs this year, or 10 percent of its workforce, as it seeks to slash costs after suffering a net loss in its 12 months to March 2009 fiscal year.
The group said it had cut 2,300 jobs in the first quarter as part of those plans. BT shed 15,000 jobs last year.
The company has been plagued by major problems at its struggling Global Services division, concerns about its ballooning pension deficit and a fierce recession in Britain.
Underlying earnings at Global Services -- which provides telecommunications and IT products to large international companies and governments -- plunged 66 percent to 62 million pounds in the first quarter.
"We have made a solid start to the year against a background of challenging trading conditions," said Chief Executive Ian Livingston.
"BT Global Services is making progress although there is still much to do.
"We are on track to deliver reductions in operating costs and capital expenditure of well over 1.0 billion pounds," he said.
In reaction to the more upbeat outlook, BT's share price rallied 14.28 percent to 128.95 pence in morning trade on London's FTSE 100 index of leading companies, which was up 0.43 percent at 4,567.28 points.
In recent years, Global Services was expanded rapidly -- but at the same time its costs have rocketed, sparking several profit warnings.
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