Thursday, October 30, 2008

BT Trims Guidance Citing Weakness in Global Business Services

BT Group plc trimmed its guidance for the second quarter (ending 30-September-2008) of its 2008/9 financial year and for the full year. For the second quarter, the company now expects to report that group revenue that will be ahead of expectations but that EBITDA and earnings per share will be slightly below expectations. BT Retail, BT Wholesale, Openreach and Other activities will deliver results in line with or ahead of expectations.

However, the company said the performance of BT Global Services will be disappointing. Revenue growth in this division will remain strong, up 15 per cent year on year, but EBITDA of around £120 million will be significantly below expectations. The fall in EBITDA is due to slower than anticipated delivery of efficiency savings and the continued decline in higher margin UK business.

BT expects to report a year on year improvement in free cash flow for the quarter. The Board intends to declare an interim dividend of 5.4 pence per share in line with last year.

Ian Livingston, Chief Executive of BT, said: "BT is performing in line with or ahead of expectations in all but one of its divisions, so the results in BT Global Services are particularly disappointing. We acknowledge that the performance in this part of the group is unsatisfactory and are committed to taking decisive action to rectify the situation. BT Global Services already has a number of cost efficiency and margin improvement initiatives in place and we are now focused on speeding up the execution of these initiatives which will deliver margin improvement going forward. We intend to set new targets for this division as improved performance is delivered."

In addition, BT announced that Fran├žois Barrault resigned as Chief Executive, BT Global Services and as a BT Group plc Board director on October 30th. He has been replaced by Hanif Lalani, currently Group Finance Director.