BT warned yesterday that its international profits had tumbled, in a further sign that the eurozone crisis and the latest 0.7 per cent slump in the UK economy were taking a heavy toll on British companies.
The telecoms giant said headline earnings before interest, taxes, depreciation and amortisation at its global services arm – which supplies customers such as Tesco and Rolls-Royce in the UK and abroad – fell by 14 per cent in the past three months.
"Continental Europe has got worse rather than better [with Spain particularly difficult]," said the BT chief executive Ian Livingston. "There's not going to be a quick recovery."
Meanwhile, the FTSE 250 media and events company Informa slumped into the red after taking a hit of more than £100m on the sale and writedown of its European conference businesses. The chief executive, Peter Rigby, said it was suffering from "continued uncertainty and volatility in Europe with negative growth in real terms".
Shares in BT dropped as much as 7 per cent and Informa by up to 8 per cent, even before news emerged from the Office for National Statistics of a worse-than-expected 0.7 per cent plunge in gross domestic product.
Mr Livingston said there had been a marked change in behaviour by corporate clients, notably financial services firms in Europe and America. They were taking longer to sign contracts and holding on to existing technology rather than upgrading.
BT Global Services won only £1.1bn of new business in the period, compared with £1.6bn a year earlier. Significantly, the biggest such contract BT won was worth "only" £50m. "That's unusual for us," said Mr Livingston, who explained that BT would usually expect to win several contracts worth more than £100m in the quarter.
BT Global Services has had a troubled past, with a series of profits warnings in 2008 and 2009, and its boss departed abruptly but it has performed better in recent years.
Despite the eurozone, Mr Livingston said Global Services' ebitda should still increase for the full year and the outlook for the group was unchanged.
Ian Livingston said he expected BT's underlying earnings in the 2103-14 financial year to to be flat because of his £738m bet on Premier League football pay-TV rights.