Redundancy costs dent BT profits
But the cutbacks are working
BT's results for its second quarter - ended 30 September 2009 - are not as bad as expected.
The company's aggressive cutting of jobs and costs is working and it was hoping to hit £1bn for the year, having already cut £900m from annual spending. It expects to make free cash flow of £1.6bn compared to previous expectations of £1bn
Revenue for the three months is £5,122m, down three per cent on last year, or six per cent down including currency movements. Operating profit was £550m, compared to £648m last year. Ebitda was £1,436m, up two per cent on last year's figure. Group operating costs were down three per cent to £4,559m and BT spent £21m on redundancy deals.
Chief executive Ian Livingstone said it had been a quarter of progress, but there was still work to do.
BT Global Services made a loss of £96m on sales of £2,024m, down three per cent on the same three months of 2008. Costs at the division were down eight per cent.
BT Retail brought in £2,062m in sales and made an operating profit of £356m.
The Wholesale business made £1,125m compared to £1,168m last year and an operating profit of £158m.
Revenues at Openreach are divided between cash from other divisions and money brought in from outside the firm. External revenue was £299m, compared to £242m last year, while revenue from other BT divisions was £986m compared to £1,061 last year.
The company is raising its dividend for the year by five per cent and is paying an interim divi of 2.3p.
The firm's bottom line had a large hole blown in it last time by BT Global Services, which made a loss of £1.5bn on sales of £2.1bn. The division's boss, Francois Barrault, took home a £2.85m severance package. Some 15,000 other people lost their jobs at BT this year, and the same number will go next year, presumably with slightly less cash in their pockets.
Full numbers here. ®