BT hikes cost-cut target

12th Nov 2009 07:25

Telecoms giant BT has reported second quarter revenue in line with expectations and thinks it can cut costs by at least £1.5bn this year versus its old target of over £1bn. The company also predicts the decline in full-year revenue before one-off items will be 3-4%, slightly less than the 4-5% forecast previously.Revenue for the three months to 30 September dipped 3% to £5.12bn, or 6% excluding foreign exchange movements and acquisitions. Adjusted profit before tax fell 6% during the quarter to £461m and by 12% for the half-year to £888m, but it was 44% lower on a reported basis at £275m.Adjusted earnings before interest, tax, depreciation and amortisation rose 2% to £1.44bn, reflecting progress in all lines of business, including the troubled Global Services arm, said the firm.Global Services, which serves corporate clients, saw revenue slip 3% to £2.02bn and earnings by 10% to £95m. Revenue was down 5% to £2.06bn at the retail business, but earnings rose 11% to £475m, while the wholesale unit reported a 1% rise in earnings to £328m despite revenue falling 4% to £1.1bn."We have had another quarter of progress but there remains a lot more to do. With total cost reductions of over £900m in the first half, we have made significant headway towards our previous target of well over £1bn for the full year," said chief executive Ian Livingston. "We now expect to generate at least £1.6bn of free cash flow this year, compared with our previous target of over £1bn."The full-year dividend is expected to increase by 5% following an interim payout of 2.3p a share.