BT posts loss but cost cuts boost shares
BT GROUP posted a 45 per cent drop in first-quarter pre-tax profit yesterday, driven by its loss-making Global Services (GS) division, but said that it had made a good start on meeting its new cost-cutting targets.
Shares rose after the group reported pre-tax profit of £272m, on better-than-expected revenues of £5.2m, which were down three per cent on the previous year.
BT chief executive Ian Livingston said that it is on track to deliver reductions in operating costs and capital expenditure of well over £1bn, adding that it has achieved £357m in overall savings already.
Livingston confirmed that cost saving initiatives at GS were also well underway 2,300 job cuts at the operation over the three month period.
Livingston added that the group’s other divisions – BT Wholesale, BT Retail and Openreach – all continued to perform well, generating earnings growth of six per cent.
Analysts welcomed the results as a solid start to the year but noted concern over the group’s pension deficit which almost doubled to £5.8bn, from a deficit of £2.9bn.
There are also fears that a triennial review of its pension scheme could show a deficit as high as £11bn, forcing BT to contribute more than the £525m-a-year it has pledged for the next three years.