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A year after its first shock profit warning, BT today raised its forecasts for several key financial measures for the current year, putting some of the damage behind it.
“We have had another quarter of progress but there remains a lot more to do,” said chief executive Ian Livingston.
“We have already made cost savings of more than £900 million in the first half so we can up our forecast for savings for the full year to at least £1.5 billion.”
He also pleased the City by saying that the full-year dividend, which was slashed after the profits warning, would rise by around 5% on last year's total of 6.5p.
Until today, analysts had had an unusually wide range of estimates for how much BT might pay out. Livingston said that cost savings had come from a variety of areas including cutting staff by 15,000 this year, as it did last year.
But he said most savings were coming from greater efficiencies including a new deal with the Communications Workers Union to allow OpenReach staff to work out of hours and at weekends rather than bringing in expensive contractors.
Global Services, the IT division that went so disastrously wrong, has for the first time cut costs in the latest quarter and 7600 staff have left from there in the last year.
Livingston said he now expects improved results from the division for the rest of this year and next.
For the full year, BT's total revenues will fall by between 3% and 4%, which is 1% better than previously predicted. In the three months to end-September revenues were down 3% at £5.12 billion.
Pre-tax profits dropped 44% to £275 million but excluding redundancy costs and other specific costs, adjusted profits were down only 6% at £461 million. The first-half dividend is 2.3p.
BT shares, which crashed as low as 71.4p earlier this year, have since doubled in value and today rose 5.44p to 147.2p. Analysts said that BT management was delivering is cost- cutting pledge far more quickly than originally expected.
Reader views (1)
So BT announces rise in dividends. They can do this with the massive bills we get nowadays. I get my bill every three months and this week I got my latest bill. I use broadband but hardly ever use the phone. My bill for making two calls in the three months was £2 but the whole bill for "line rental" etc was for £90. Renationalise NOW.
- Thomas Hayes, Leeds UK, 12/11/2009 19:35
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