(Alliance News) - Telecommunications provider BT on Thursday reported a fall in revenue and profit but expects payouts to shareholders to resume in the financial year ahead.
BT also said it will pick up the pace of its fibre rollout in the UK.
Revenue for the financial year that ended March 31 fell 7% to GBP21.33 billion, with pretax profit falling 23% to GBP1.80 billion. The revenue slide was due to a Covid hit to its consumer and enterprise units, ongoing legacy product declines, and divestments.
BT paid no dividend for the recent year, but expects payments to resume at an annual rate of 7.7p per share in the 2022 financial year.
The outlook for 2022 sees adjusted revenue broadly flat year-on-year and adjusted earnings before interest, taxes, depreciation and amortisation between GBP7.5 billion to GBP7.7 billion. This compares to GBP7.42 billion for the recently ended year.
BT separately said it has decided that the "conditions are right" to increase and accelerate Openreach's total fibre-to-the-premises build to 25 million premises from 20 million by December 2026. It cited the clarity provided by regulator Ofcom's recent market review, the UK government's cash tax super-deduction, and a "positive outcome" from the recent 5G spectrum auction.
Openreach will start its ramp up to 4 million premises a year with immediate effect.
"BT believes it could deliver further shareholder value by funding the additional 5 million premises through a joint venture with external parties and will explore joint venture structures over the first half of the current financial year," the company said.
BT has also agreed on a pension valuation with the BT Pension Scheme. The funding deficit at June 30, 2020 has been agreed at GBP7.98 billion, broadly in line with the projected position from 2017 when the deficit was GBP11.3 billion.
BT shares were down 3.1% early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.3% at 6,912.54
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Hang Seng: down 1.5% at 27,821.90
Nikkei 225: closed down 2.5% at 27,448.01
DJIA: closed down 681.50 points, or 2.0%, at 33,587.66
S&P 500: closed down 89.06 points, or 2.1%, at 4,063.04
Nasdaq Composite: closed down 357.74 points, or 2.7%, at 13,031.68
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EUR: up at USD1.2096 (USD1.2075)
GBP: down at USD1.4050 (USD1.4104)
USD: up at JPY109.57 (JPY109.45)
Gold: down at USD1,822.13 per ounce (USD1,825.25)
Oil (Brent): down at USD68.41 a barrel (USD69.77)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
1100 BST Ireland consumer price index
0830 EDT US initial jobless claims
0830 EDT US producer price index
1030 EDT US EIA weekly natural gas storage report
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Coronavirus infections in England halved in recent months, according to a study, but concerns remain about the threat from new variants. Prevalence of infections dropped by 50% between March and early May, and is at its lowest since August, new data suggests. But the figures come amid a warning from UK Prime Minister Boris Johnson that new variants "pose a potentially lethal danger". Johnson said there is "increasing concern" in the UK about the variant first identified in India. However, the European Medicines Agency said it was "pretty confident" that vaccines currently in use are effective against the Indian variant – a view echoed by some British scientists.
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Israel has pressed ahead with a fierce military offensive in the Gaza Strip, killing as many as 10 senior Hamas military figures. The country's defence force also toppled a pair of high-rise towers housing Hamas facilities in airstrikes. Gaza's Health Ministry said the death toll rose to 69 Palestinians, including 16 children and 6 women. A total of seven people have been killed in Israel, including 4 people who died on Wednesday. Meanwhile, Hamas continued to fire rockets at Israeli cities. In just three days, this latest round of fighting between the bitter enemies has already begun to resemble – and even exceed – a devastating 50-day war in 2014.
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Iranian Foreign Minister Mohammad Javad Zarif said his country was ready to build close relations with its regional rival Saudi Arabia. Zarif was speaking after meeting with Syrian President Bashar al-Assad in Damascus. The Syrian state news agency Sana quoted Zarif as saying that Iran had made contacts with Saudi Arabia. He hoped those contacts will lead to greater cooperation between both countries to achieve peace and stability in the region, especially in war-devastated Yemen. Sunni Saudi Arabia and Shiite Iran view each other as arch-enemies and have been competing for decades for economic and political primacy in the region.
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BROKER RATING CHANGES
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BERENBERG RAISES FDM GROUP TO 'BUY' ('HOLD') - TARGET 1250 (1100) PENCE
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BERENBERG INITIATES ILIKA WITH 'BUY' - TARGET 275 PENCE
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COMPANIES - FTSE 100
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Burberry reported a recovery into the end of its financial year as it brought its payout back to pre-pandemic levels. Revenue for the year to March 27 fell 11% to GBP2.34 billion from GBP2.63 billion but, as a result of net operating expenses being cut by 25% to GBP1.14 billion from GBP1.52 billion, pretax profit nearly tripled GBP490.2 million from GBP168.5 million. The fall in revenue, which was down 10% at constant exchange rates, was due to store closures and reduced tourism, Burberry said, though with a strong recovery in the second half. The luxury fashion brand said its recovery accelerated through the year, leading to fourth-quarter comparable store sales rising 32% year-on-year, and down 5% on two years ago, even with an average of 16% of stores being closed. Burberry declared a full-year dividend at the financial 2019 level of 42.5p on the back of strong cash generation with the progressive policy reinstated. This compares to just an interim dividend of 11.3p paid out for the 2020 financial year.
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Rolls-Royce said trading has been in line with expectations and it still anticipates turning free cash flow positive "at some point" in the second half of 2021. In the first four months of 2021 large engine flying hours were around 40% of 2019 levels, supported by demand for cargo flights and the maintenance of key routes, said the jet engine maker said ahead of its annual general meeting. This is broadly unchanged from the run rate at the end of 2020 and consistent with planning assumptions. While the outlook is uncertain, the firm said vaccination programmes, particularly in the US and UK, are "encouraging". Rolls-Royce added that it has made good progress on its targeted GBP1.3 billion of annualised cost savings, and has an "encouraging range" of interested parties for the sale of its ITP Aero business in Spain.
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Fund supermarket Hargreaves Lansdown reported a period of "very strong growth" with record net new business and client growth. Net new business in the four months to April 30 was GBP4.6 billion, with assets under administration of GBP132.9 billion at the end of the period, up 28% in the year-to-date. Revenue for the period was GBP233.2 million, bringing the year-to-date total to GBP532.7 million, up 19% on a year before. Net new clients for the period were 126,000, taking total active client numbers to 1.6 million. "Where daily share dealing volumes settle, as we ease out of lockdown and life returns to more normal, is difficult to say. Similar to when previous lockdowns have been lifted, we have begun to see a reduction in share dealing volumes in both UK and overseas trades. However...we are confident that we will see a higher base level of dealing volumes than we did pre Covid-19," the company said.
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COMPANIES - FTSE 250
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Wealth manager Brewin Dolphin lifted its interim dividend by 4.5% to 4.6p from 4.4p, as it reported a 44% jump in half-year pretax profit to GBP40.7 million from GBP28.2 million. Income rose by 14% to GBP199.9 million from GBP175.8 million. Total funds were GBP52.6 billion, up 11% from GBP47.6 billion a year ago, while discretionary funds also were up 11% to GBP45.7 billion from GBP41.2 billion. Brewin said it expects commission income to reduce in the second half, but it has increased confidence in its full-year outlook overall.
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Infrastructure construction firm Balfour Beatty named Charles Allen as its new non-executive chair, replacing Philip Aiken. Allen is the former chief executive of both television broadcaster ITV and catering firm Compass. He was chief advisor to the British Home Office and sits in the House of Lords. Balfour told its annual general meeting that its cash performance has been positive in the first four months of 2021, and it expects earnings-based businesses Construction Services and Support Services to have underlying profit from operations for 2021 in line with 2019's GBP172 million. It said the group order book was GBP15.7 billion on March 31, down from GBP16.4 billion at the end of December.
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COMPANIES - GLOBAL
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Tesla has stopped accepting payments using cryptocurrency bitcoin for environmental reasons, the US electric car firm's founder Elon Musk said. Tesla is concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, Musk tweeted. Bitcoin's price suddenly plummeted by thousands of dollars after the tweet was published. Its price dropped to USD48,000 - more than 15% lower than a day earlier. Alongside bitcoin, the second-biggest digital currency ether, dogecoin and other currencies including binance coin and ripple also saw sharp price drops. Musk made clear that he remains an advocate for the industry. "Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment," Musk wrote in his tweet.
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Thursday's Shareholder Meetings
Access Intelligence PLC - AGM
Balfour Beatty PLC - AGM
Bould Opportunities PLC - GM re Cizzle Biotechnology acquisition
Conduit Holdings Ltd - AGM
ContourGlobal PLC - AGM
Direct Line Insurance Group PLC - AGM
Elementis PLC - AGM
Empresaria Group PLC - AGM
Eurocell PLC - AGM
Hiscox Ltd - AGM
IGas Energy PLC - AGM
John Wood Group PLC - AGM
Moneysupermarket.com Group PLC - AGM
Ocado Group PLC - AGM
Prudential PLC - AGM
Quilter PLC - AGM
Rolls-Royce Holdings PLC - AGM
Serinus Energy PLC - AGM
SIG PLC - AGM
Spire Healthcare Group PLC - AGM
TI Fluid Systems PLC - AGM
TT Electronics PLC - AGM
Unite Group PLC - AGM
Valeura Energy Inc - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
