Colt (COLT) has delivered its first annual revenue growth for seven years, ahead of consensus forecasts, although adjusted pre-tax profits still contracted 14 per cent to €61.8m on slightly depressed margins and higher depreciation charges. Reported profits were also hit by a €32m restructuring charge.
After four years of declines, voice revenues finally gained some purchase as Colt's internal investment was rewarded with a 25 per cent jump in carrier revenues to counterbalance continuing decline in the larger corporate and reseller market. Data, the largest product segment, was carried along by the market's strong demand for faster ethernet services (12.6 per cent sales growth), which offset the ongoing decline in customer spending on traditional broadband. Managed services, the smallest of Colt's divisions, is an area of particular focus for chief executive Rakesh Bhasin as part of last year's "transformation programme".
Colt is accelerating its cost-cutting programme with the removal of 200 jobs and a new focus on the businesses where most growth lies, resulting in a net annual cost saving of €27m by 2014. Although demand in this area is "always going to be lumpy", Mr Bhasin spies a "significant opportunity" in data centres, saying the media and insurance industries are already increasing spending and that financial services offers "significant potential". As part of these plans, capital expenditure rose 10 per cent to €307m and will keep rising in the next few years.
Nomura tweaked its EPS forecasts up 3 per cent to 6¢.
COLT (COLT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 128p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 127.7-128p | 12-MONTH HIGH: | 134p | LOW: 92p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 49 | |
| NET ASSET VALUE: | 166¢ * | NET CASH: | €280m | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 1.68 | 72.0 | 11.0 | nil |
| 2009 | 1.62 | 94.7 | 14.0 | nil |
| 2010 | 1.58 | 47.0 | 8.0 | nil |
| 2011 | 1.55 | 72.0 | 7.0 | nil |
| 2012 | 1.59 | 61.8 | 3.0 | nil |
| % change | +3 | -14 | -57 | - |
£1=€1.16 *Includes intangible assets of €163.5m, or 18¢ a share | ||||
