BT gains from cost-cutting programme as first-quarter profits climb 17 per cent
Friday 30 July 2010
Latest in Business News
On Facebook
BT lifted profits 17 per cent between April to June as its cost-cutting plan continued to pay off, in what the group's chief executive called an "acceptable" start to its financial year.
BT faced down potential strike action earlier this month and also announced it was to start offering customers Sky Sports content. There was more good news in its first-quarter numbers yesterday as pre-tax profits hit £446m, up from £382m in the corresponding period a year earlier.
Ian Livingston, BT's chief executive, said: "We have made an acceptable start to the year, delivering improved financial results while investing in the future of the business."
Revenues declined 4 per cent from £5.2bn in the first quarter of 2009 to £5bn this year. Yet, the group's operating costs fell 6 per cent to £4.4bn, principally due to reductions in labour costs. Robert Grindle, an analyst at Deutsche Bank, said the results were "solid".
While the City raised fears over how the Government's cuts could affect the group, BT reiterated its outlook for the full year "despite the challenging environment", Mr Livingston said. Government contracts make up 10 per cent of group revenues, and BT said the cuts posed an "opportunity and a challenge". Mr Grindle added: "The challenges of government contracts are real."
The company added 96,000 new customers to its broadband service during the quarter, which has increased since the launch of its fibre-based broadband product "Infinity" in January.
Mr Livingston backed a solid performance at BT's Global Services division, which had dragged the group to a full-year loss in 2008. While revenues at the division declined 3 per cent, the group's head said: "In BT Global Services we continue to win significant contracts due to our ability to deliver a world-class service to our customers."
The group surprised analysts over its free cash flow. While the research houses had predicted £100m of outflows, it actually recorded an inflow of £415m because of "the improved profitability and lower capital expenditure".
The issue of the pension still looms over BT. The group proposed a plan in February to plug the deficit, which was then valued at £9bn. The Pension Regulator rejected the plan and it remains under review. Yet BT revealed that the deficit now stands at £6.6bn following a recovery in the equity market.
BT is also awaiting the result of a case in the High Court, over the Crown guarantee. The case revolves around whether the Government would cover BT's pensions if the company were to go bust.
- 1 Apple admits it has a human rights problem
- 2 Caught in his own blast: an Iranian targeting Israel
- 3 No secularism please, we're British
- 4 Reinstate Knox's murder charge, Italian court told
- 5 Police confiscate passport from Brooks' assistant
- 6 Lightning kills an entire football team
- 7 'Drunk tanks' and minimum prices to help Britain sober up
- 1 How Koscielny became prince of the Emirates
- 2 Apple admits it has a human rights problem
- 3 Spotify: 1 million plays, £108 return
- 4 Six Grammys, five years off: Adele puts love before career
- 5 Lightning kills an entire football team
- 6 Police confiscate passport from Brooks' assistant
- 7 Nauru and Abkhazia: One is a destitute microstate marooned in the South Pacific, the other is a disputed former Soviet Republic 13,000km away, so why are they so keen to be friends?
- 8 I was born to be a killer. Every night I see the Devil in my dreams
- 9 Mark Steel: If religion is 'marginal', I'm the Pope
- 10 Rothschild loses libel case, and reveals secret world of money and politics
Free trial of new Independent iPad app
Get your daily dose of the best of British journalism, sponsored by American Airlines
Win a three-week coastal jaunt
Spend three weeks exploring every nook and cranny of gorgeous Atlantic Canada.
Amazing restaurant offers
Three glasses of free champagne and a special menu at 46 top London restaurants.
Latest Independent competitions
Win anything from gadgets to five-star holidays on our competitions and offers page.
Commercial thought leaders
Watch the best in the business world give their insights into the world of business.
Career Services
Day In a Page
No secularism please, we're British




Comments