BT is cutting 10,000 jobs in a bid to to offset margin declines and a particularly poor performance in its Global Services division which provides governments and corporate network IT services overseas. A profit warning three months ago had already alerted investors to the underperformance of the Global Services division which, despite growing revenue by 15 per cent to £4.2bn, turned in losses of £39m from a profit of £14m at this stage last year. Management - including the newly installed head of Global Services and former group finance director Hanif Lalani - will now be focusing in on accelerating its cost efficiency and margin improvement plans in the unit.
The domestic businesses - BT Retail, Wholesale and Openreach - broadly traded in line with expectations, with underlying operating profits up 5 per cent to £1.49bn, although new wave revenues disappointed with BT's retail business only attracting 69,000 net new broadband additions in the second quarter, representing 27 per cent of the market and well below its 34 per cent market share.
Streamlining efforts delivered savings of £306m across the group in the half year and analyst Mark James at Collins Stewart says that the renegotiation of BTs pension terms could reduce ongoing annual costs by £100m.
Standard & Poors is expecting full-year pre-tax profits of £2.06bn, giving EPS of 21.3p (2008:23.4p).
BT GROUP (BT.A) | ||||
|---|---|---|---|---|
| ORD PRICE: | 121.8p | MARKET VALUE: | £9,415m | |
| TOUCH: | 121.5-121.8p | 12-MONTH HIGH: | 297p | LOW: 100p |
| DIVIDEND YIELD: | 13.0% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 50p* | NET DEBT: | 285% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net dividend per share (p) |
|---|---|---|---|---|
| 2007 | 10.1 | 1.04 | 11.6 | 5.4 |
| 2008 | 10.5 | 1.03 | 10.3 | 5.4 |
| % change | +3 | -1 | -11 | - |
Ex-div: 22 Dec Payment: 9 Feb *Includes intangible assets of £3.7bn, or 48p per share | ||||
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