BT gains from cost-cutting programme as first-quarter profits climb 17 per cent

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.

Independent Comment
blog comments powered by Disqus
News in pictures
World news in pictures
       

Day In a Page

Johnny Marr talks relationships and reunions

He's worked with Modest Mouse, the Pet Shop Boys and Beck, to name a few, and recently released his first solo album. So why, wonders Johnny Marr, do people still hark on about The Smiths?
After the flood: From Haiti to Britain, one man has captured the devastation of our increasingly deluged lands

In pictures: After the flood

From Haiti to Britain, one man has captured the devastation of our increasingly deluged lands
Death becomes her: Meet the very modern mortician who champions 'cool' funerals

Death becomes her: A very modern mortician

Ever considered baking a loved one's remains into a cake or putting their ashes in fireworks? If so, talk to Caitlin Doughty, champion of the alternative death industry.
How long can the 'Keep Calm' trend carry on?

How long can the 'Keep Calm' trend carry on?

At first it seemed clever and cute. Then the 'Keep Calm' motif went mad, spawning endless offshoots.
The man who built Brum: A lament for the demise of John Madin's Brutalist Birmingham

John Madin: The man who built Brum

The architect's buildings were supposed to leave an indelible, futuristic mark on his beloved hometown but they are now being inexorably torn down.
School of chop: Learning the art of butchery at the Ginger Pig

School of chop: Learning the art of butchery

How do you butcher a lamb? Or make Mexican street food in a British kitchen? Christopher Hirst finds out.
James Pembroke: The man who's eaten everywhere

The man who's eaten everywhere

Few people know more about restaurants than James Pembroke, who only spent five mealtimes at home during his entire childhood.
A Berliner in 1963 – but did John F Kennedy once admire Adolf Hitler?

A Berliner in 1963 – but did John F Kennedy once admire Adolf Hitler?

The young JFK praised 'superior' Nordic races during visits to Germany
Banned Iranian director Mohammad Rasoulof to attend Cannes Film Festival 2013, his first public appearance since prison

Banned Iranian director to attend Cannes Film Festival

Mohammad Rasoulof to make his first public appearance since being imprisoned three years ago
Seeing the larger picture: Inspiring images of space

Seeing the larger picture: Inspiring images of space

An exhibition explores images how photography has shaped astronomy
Eat Spam and carry on: Wartime pamphlets could teach us a thing or two about healthy, thrifty eating

Eat Spam and carry on

Wartime pamphlets could teach us a thing or two about healthy, thrifty eating
Facial hair: Cat beards and the purrrsuit of excellence

Facial hair

Cat beards and the purrrsuit of excellence
The 10 Best salt and pepper sets

The 10 Best salt and pepper sets

Whether they're for everyday use or to make your dining table look just right, it's worth getting a stylish shaker...
Ferran Soriano: Predicting success if Manchester City 'vision' is followed

Ferran Soriano: Predicting success if Manchester City 'vision' is followed

Chief executive says trophies will come if a 'core' of suitable players is in place
Thomas Müller: We couldn't handle losing a Champions League Final again

Thomas Müller: We couldn't handle losing a Champions League Final again

The Bayern Munich forward tells Tim Rich his side have to shed chokers' tag after two recent final defeats