Connected Research

Union policy research in the 21st century

BT full-year results

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BT’s preliminary full-year results announcement this morning identified some pretty poor headline figures. The company was itself damning in its assessment, referring to the ‘unacceptable’ performance in Global Services not once, but twice. And the share price was down too, giving it a market capitalisation of just £7.3bn.

And yet, and yet… This is not a company in such bad underlying shape: total turnover, in the midst of a recession (telecoms revenues have always been something of a bellwether for the state of the economy), revenues in the full year rose by 3%; even in the last quarter (January-March) they rose by 1% (although it should be noted that the company is expecting a pretty sizeable decline here, in the order of 4-5% in 2009-10). Outside Global Services, earnings rose by 4%, driven by cost reductions of 9% – towards which figure Connect members have striven very hard, paying either with their jobs or else with harder and harder workloads arising from those left having to cover for colleagues who have left the company. Even including GS in the figures, operating profit before the charges made in respect of contract reviews totalled £2.7bn on turnover of £21.4bn – a margin of some 12.4%. Attention is heavily focused on this being lower than in 2007-08 (when the equivalent margin was 14.6%) – but this detracts from a consideration that this level of profitability, and the level of margin it represents, is still a very healthy figure even if below the company’s long-term target.

And, ultimately, the company was able to take the hit from its £1.3bn impairment charges in contract and financial reviews in Global Services (plus a further £280m in restructuring charges) in one go – and still end up making only a small loss.

Not a great set of results, for sure – but neither is it a company facing imminent demise, as Robert Peston, BBC Business Editor, also agrees. The company’s established businesses are generating cash and signing up new customers. Nevertheless, its plunging share price (down 60% in the last year) does make it look very cheap and, in these circumstances, perhaps it is particularly good news for BT and its workforce that the economic climate has put private equity companies – at least temporarily – into hiding.


Written by Calvin

14/05/2009 at 11:43 am

Posted in Telecoms companies

Tagged with ,

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