Ben Verwaayen, BT's chief executive, yesterday admitted he wished he had not placed such emphasis on the group's revenue targets as he conceded that ongoing tough market conditions meant they now looked out of reach.
While revenue growth for the second half of the current year is expected to be in line with current market expectations, BT said it was "unlikely" to achieve its target of growing revenue by 6-8 per cent a year for the next three years.
Mr Verwaayen, who took over from Sir Peter Bonfield as chief executive earlier this year, had sketched out his targets for the business in April and had insisted in July that there was no need for change.
With hindsight, he said, he thought "it wasn't smart" to have put that target at the top of the list but noted that staff at BT were "not off the hook" with regard to growing the business aggressively. BT said yesterday it grew revenues on ongoing activities by 2 per cent to £4.66bn in the second quarter to 30 September compared with a year ago, meaning revenues for the half year were also 2 per cent ahead at £9.25bn.
The company said second-quarter figures were "excellent" given the tough economic climate. Pre-tax profits from continuing operations were up 55 per cent in the second quarter to £496m before accounting for goodwill amortisation and exceptional items, while underlying, or Ebitda, profits were £1.48bn, up 7 per cent. "This is an excellent set of results," said the chairman, Sir Christopher Bland, adding: "The operating performance of the business has been particularly strong in a difficult market."
BT also stuck by its other three-year targets, including growing earnings per share by 25 per cent, spending less than £3bn a year on capital expenditure and getting debt below £10bn by early 2005. The company also said it planned to pay an interim dividend of 2.25p a share and predicted the final-year figure would be "slightly more" than one-and-a-half times that number, implying a total of at least 5.7p for the year. Shares in BT closed up 5.7 per cent at 199p.
While City analysts welcomed the hike, they thought the company could afford to pay out more to shareholders, with one calling the dividend "mean". "Given the strong earnings per share, lower capex and cash coming from Cegetel in due course, we consider this a little disappointing," said analysts at Schroder Salomon Smith Barney.
In the company's defence, Sir Christopher pointed out that a year ago 2.25p "would not have looked mean, it would have looked impossible". BT had £13.1bn of debt at the end of September, a reduction of £285m in the quarter, and said debt would fall to below £11bn once the sale of its 26 per cent share of the French telecoms firm Cegetel was completed.
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