Cable & Wireless Communications' (CWC) full-year figures aren't as grim as the headline numbers suggest. Adjust for a raft of exceptionals - including restructuring costs and impairment charges to reflect tough economic conditions at the eastern Caribbean operations - and underlying group operating profit was flat at $328m (£217m).
The telecommunication group's challenges in the Caribbean - which some analysts attribute to lower visitor numbers - meant that flat group mobile revenues of $911m weren't enough to offset the ongoing decline in traditional fixed voice services, despite higher data usage. Accordingly, group fixed voice revenue fell 10 per cent to $437m. To counter that, management has set a new $100m savings target, to be achieved by cutting its London office and thinning out management layers. That will involve an upfront cost of $150m-$200m. Accordingly, management anticipates boosting the Caribbean side's medium-term cash profit margin to 30 per cent.
Significant progress, however, is being made in reshaping the business after announcing plans in January to sell a 51 per cent stake in Macau operation, Telecomunicações de Macau, for $749.7m. Since the period ended, the disposal of the Monaco & Island unit was completed for $601m. That leaves the the group's other core region as Panama - responsible for 30 per of group revenue.
Deutsche Bank expects adjusted EPS of 1¢ for 2014 (from 6.6¢ in 2013).
CABLE & WIRELESS COMMUNICATIONS (CWC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 45p | MARKET VALUE: | £1.14bn | |
| TOUCH: | 44.8-45p | 12-MONTH HIGH: | 46.4p | LOW: 27.1p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | na | |
| NET ASSET VALUE: | * | NET DEBT: | $1.51bn | |
| Year to 31 Mar | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 2.45 | 394 | 6.4 | na |
| 2010 | 2.35 | 383 | 4.9 | 3.34 |
| 2011 | 2.44 | 462 | 7.6 | 8.00 |
| 2012 | 2.03 | -117 | -7.8 | 8.00 |
| 2013 | 1.94 | 35.0 | -3.4 | 4.00 |
| % change | -4 | - | - | - |
Ex-div: 29 May Payment: 9 Aug *Negative equity shareholders' funds £1=$1.51 | ||||
