Telecommunications company BT Group PLC on Thursday reported that net profit fell 29 percent in the second quarter but upgraded its full-year guidance and said it was making good progress in reducing costs.
For the three months ending Sept. 30, BT reported a net profit of 287 million pounds ($475 million) compared to 406 million pounds a year earlier. Revenue fell from 5.3 billion pounds to 5.1 billion pounds.
BT said earnings before interest, taxes, depreciation and amortization in its struggling Global Services unit — which generates about two-fifths of company revenue — rose 53 percent from the first quarter to 95 million pounds, though that figure was still 10 percent below a year earlier.
The company said it expected to raise its full-year dividend by 5 percent.
BT also said it forecast full-year revenue to be down by 3-4 percent, better than its previous estimate of a 4-5 percent drop, and raised its expectations for cost cuts and free cash flow.
BT shares rose 4 percent to 147.7 pence in early trading on the London Stock Exchange.
"With total cost reductions of over 900 million pounds in the first half, we have made significant headway towards our previous target of well over 1 billion pounds for the full year," said Chief Executive Ian Livingston.
"We now expect to generate at least 1.6 billion pounds of free cash flow this year, compared with our previous target of over 1 billion pounds."
Global Services, a provider of communication services for companies and government agencies, posted a pretax loss of 2 billion pounds in the previous full year, 1.5 billion pounds of that total in the fourth quarter.
BT said the unit's second quarter performance reflected the impact of recession, lower wholesale call volumes in continental Europe, falling equipment sales and a continuing decline in call and line revenue in the U.K.
About 1,600 jobs were cut in Global Services in the third quarter. Global Services now employs around 37,000 people in 53 countries, 7,600 less than a year ago, BT said.
"Despite an improved performance at the group's troubled Global Services division, strategic questions remain: does the company have the stomach to invest long term in this international business, a move clearly out of its comfort zone?" said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.
He said BT's second-quarter report was "solid if not wholly convincing."
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