Cost cutting boosts BT earnings

TELECOMS giant BT today announced second quarter profits ahead of City expectations as it continued to benefit from cost cutting. BT, the largest private sector employer in Suffolk with its research facility at Adastral Park, near Ipswich, said that costs had been reduced by more than �900 million following a jobs cull in the first six months of the current financial year.

TELECOMS giant BT today announced second quarter profits ahead of City expectations as it continued to benefit from cost cutting.

BT, the largest private sector employer in Suffolk with its research facility at Adastral Park, near Ipswich, said that costs had been reduced by more than �900 million following a jobs cull in the first six months of the current financial year.

A total of 15,000 jobs are due to go by the end of March 2010, helping to offset poor trading within its global IT services division which last year left the group �100 million in the red.

However, BT chief executive Ian Livingston said today there were encouraging signs of an improvement performance this year, and he raised forecasts for group revenues.


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Revenue for the second quarter of the year, covering the three months to September 20, was 3% down on the same period last year at �5,122 billion - representing a decline of 6% excluding foreign exchange movements and acquisitions.

However, underlying profits were 2% ahead at �1.436bn, well ahead of City expectations of around �1.37bn.

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BT said the figure reflected progress in all lines of business, with the contribution of �95m from BT Global Services representing a 53% increase on the first quarter.

Within the group's retail business, second quarter revenues declined by 5% to �2.06 billion but the reduction in operating costs saw profits rise by 9% to �356 million.

BT added that the decline in revenue for 2009-10 as a whole was now expected to fall within the range of 3% to 4%, against the 4% to 5% previously forecast, while total underlying cost reductions were now expected to be at least �1.5bn, compared with previous guidance of more than �1bn.

However, the company added: “We continue to experience challenging market conditions arising from a combination of the current economic climate, particularly in the business market, and competitive pressure.”

Mr Livingston said: “We have had another quarter of progress but there remains a lot more to do. With total cost reductions of over �900m in the first half, we have made significant headway towards our previous target of well over �1bn for the full year.

“We are investing in the future of the business with an enhanced and accelerated programme of fibre deployment and wider roll out of faster broadband speeds, all within our capital expenditure plans.

“Given our operational performance, we expect to increase dividends by around 5% for the full year. The Board is declaring an interim dividend of 2.3p per share.”

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