BT’s shares in demand on forecast-beating figures
The telecoms giant is waving goodbye to its chief executive.
BT’s shares are in demand after the telecoms firm unveiled better-than-expected sales figures.
In the quarter ended June 30, BT’s revenues came in at £5.72 billion. This was down 2% from £5.83 billion last year, but it beat analysts’ expectations of £5.7 billion, and adjusted pre-tax profits rose 3% to £816 million.
Shares were up 3.5% to 232.7p in morning trading, making BT one of the top risers on the FTSE 100.
BT’s chief executive, Gavin Patterson, will step down this year due to disappointment over the company’s performance.
We've made a good start to the year. We are making positive progress against our evolved strategy Gavin Patterson, BT's chief executive
When the move was announced, chairman Jan du Plessis said Mr Patterson had the backing of the board, but that the “broader reaction” to his work meant new leadership was required.
Mr Patterson said: “We’ve made a good start to the year. We are making positive progress against our evolved strategy.
“Our customer experience metrics continue to improve, and we have seen the successful launch of new, converged products including BT Plus, our first consumer converged offering, and 4G Assure, for business consumers.”
Sales in BT’s consumer division were up 2% to £2.59 billion, but Openreach’s sales were knocked by 2% to £1.21 billion.
Revenues also dropped in BT’s wholesale arm, down from £497 million to £459 million.
To help plug its pension deficit, BT has issued £2 billion in bonds, pushing up the company’s net debt from £2.4 billion to £11.2 billion.
BT’s pension woes were compounded by the fact that its actuaries, Willis Towers Watson, miscalculated its pension liabilities and under-estimated the scheme’s deficit by £500 million.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The accounting deficit tells us more about bond yields than it does pension obligations, and has no effect on cash flows, but clearly this slip doesn’t exactly help to inspire confidence.”
Richard Hunter, head of markets at Interactive Investor, said: “Of course, the hope is that the new chief executive will transform the prospects of the lumbering, if not slumbering, beast which BT had become.
“The scale of the task ahead should not be underestimated. There is continuing pressure on cash flow, wholesale and Openreach reported declines in adjusted earnings, whilst the pensions situation lurks in the background.”