C&W Worldwide warns on profits again

Click to follow
The Independent Online

The telecoms provider Cable & Wireless Worldwide (CWW) has warned on profits for the second time in less than a year.

Shares plunged nearly 15 per cent following the group's trading update which said profits would not meet expectations, with the decline in value of some voice contracts expected to be worse than previously predicted. It also pointed to huge pressure to provide data services and a fall in the value of several re-signed contracts. CWW also faces inflationary cost pressures, with operating expenditure expected to be £30m higher over the next year than in 2010.

Tom Gidley-Kitchin, an analyst at Charles Stanley, said: "After two warnings, there must be a concern that the company will stumble into a third before too long."

The previous profit warning came after the Coalition's emergency Budget last June, when it revealed that the Government's non-contracted spending on the group's services had crumbled.

Mr Gidley-Kitchin said: "It looks as if the original internal projections for 2011/12 were over-optimistic and either excluded certain developments that could have been spotted or anticipated, or simply made no allowance for contingencies."

Earlier this month CWW revealed that its chief financial officer, Tim Weller, would leave in July, prompting a fall in the share price.

"Today's announcement is disappointing and adds to the chequered track record the group has built up in the short time since its demerger this time last year," said Jonathan Jackson at Killik & Co.