These mixed first-half results from Cable & Wireless (CWC) show a company in transition. Total revenues dipped slightly as a result of the ongoing decline in fixed voice revenues, which fell 9 per cent to $202m (£126m). But cost cutting and decent growth in mobile revenues, which climbed 3 per cent to $465m, helped Cable & Wireless post healthy cash profits of $298m – allowing management to leave guidance for the full year unchanged in which they expect cash profits to be broadly flat.
Reported earnings were boosted by the disposals of the fast-growing Macau and Islands operations; these netted impressive proceeds of $1.4bn (£875m) but arguably rid the company of some of its best performing units. Pre-tax profits, meanwhile, were hit by $55m of one-off exceptional charges relating to redundancy payments. The company’s cost reduction programme is seeing modest progress with operating costs being trimmed to $383m from $401m the previous year. But there’s still some way to go for Cable & Wireless to hit its $100m cost reduction target this year.
Broker JP Morgan Cazenove forecasts adjusted EPS of 0.8¢ in the current year and 4.1¢ in fiscal 2015, compared with 1.9¢ last year.
CABLE & WIRELESS COMMUNICATIONS (CWC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 48p | MARKET VALUE: | £1.21bn | |
| TOUCH: | 47.5-48p | 12-MONTH HIGH: | 48p | LOW: 34p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 2 | |
| NET ASSET VALUE: | 41¢* | NET DEBT: | 35% | |
| Half-year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 963 | 55.0 | 1.5 | 1.33 |
| 2013 | 935 | 35.0 | 40.0 | 1.33 |
| % change | -3 | -36 | na | - |
Ex-div: 13 Nov Payment: 10 Jan £1= $1.60 *Includes intangible assets of $496m, or 20¢ a share | ||||
