Profits boost for Carphone Warehouse

Carphone Warehouse posted profits ahead of expectations today, after benefiting from a "buoyant" mobile market and the growth of its TalkTalk service.

The group, which has more than 1,300 retail outlets, said profits for the 26 weeks to September 25 improved 38.3 per cent to £28.1 million, with sales at £1.03 billion after a 25.1 per cent gain on the previous year.

The profits figure bettered City hopes for £27.5 million, and came with upbeat comments from chief executive Charles Dunstone on the state of the market.

He said: "The outlook continues to be positive. We expect the mobile phone market to continue to grow year-on-year over the Christmas period and into the New Year."

Carphone pledged to open more stores to consolidate its market position, while it will soon launch broadband services in the UK to drive further growth for its TalkTalk residential fixed-line operation.

The company said 650,000 customers had joined TalkTalk in the UK over the last 18 months with the service now operating profitably after a brand-building exercise that cost £18.8 million in marketing in the half year.

Carphone stuck by its target of 900,000 TalkTalk customers by March of next year while it has also launched the service in France, Spain and Germany.

In the pan-European retail business, revenues rose 22.5 per cent to £491.4 million with connections up 23.6 per cent to 2.77 million as technical developments such as 3G and picture phones brought more handsets onto the market.

Mr Dunstone added: "The mobile retail environment continues to be buoyant, with a wealth of new products and attractive offers for customers.

"Mobile markets across Europe are becoming more fragmented with the arrival of new entrants, making the need for impartial advice ever greater."

Mr Dunstone said the prospects meant the company had "no hesitation" in offering shareholders a 37.5 per cent higher half-year dividend of 0.55p a share.