BT profits fall, pension deficit jumps

30th Jul 2009 07:38

Telecoms giant BT saw profits slump in the first quarter, held back by BT Global Services, while its pension deficit surged.The group said net pension position at 30 June 2009 was a deficit of £5.8bn, compared with a deficit of £2.9bn at 31 March 2009 "The deterioration in the position since 31 March 2009 is due to the reducing discount rate and increasing inflation rate, more than offsetting the asset value increase of £1.1bn," said the group.Lower finance income and higher finance expenses pushed first quarter profits, on a reported basis, down 45% to £272m. But it saw adjusted EBITDA come in at £1.37bn against £1.41bn in the same period last year, which was better than expected. Revenue came in at £5.2bn from £5.1bn before, up 1% but 3% excluding foreign exchange movements and acquisitionsThe group said it is on track to deliver reductions in operating costs and capital expenditure of well over £1bn and to generate group free cash flow of over £1bn this year.Underlying operating costs and underlying capital expenditure was reduced by £357m to £4,295m, a reduction of 8%.BT said apart from Global Services, the rest of the group performed well with adjusted EBITDA increasing by 6% driven by growth in both BT Retail and Openreach and an improved performance in BT Wholesale. Its outlook, as stated in its full year 2008/09 results, remains unchanged.