LONDON -- BT Group
Shares in Britain's leading fixed-line telecom company have outperformed the FTSE 100 over the past year, having risen 18% compared with a 5% rise for the index. However, in the one-month run up to the results, the shares have gone off the boil, dropping 7% versus a modest 1% decline for the Footsie.
How will BT's businesses have performed in the first half compared with last year's first half? And is the group on track to meet analysts' forecasts for this year's key full-year numbers? Here's your cut-out-and-fill-in table!
|
|
H1 2012 |
FY 2012 |
H1 2013 |
FY 2013 (forecast) |
Forecast FY Growth |
|---|---|---|---|---|---|
|
Revenue (billions of pounds) |
9.25 |
18.90 |
-- |
18.45 |
(2.4%) |
|
Operating Margin |
14.1% |
15.4% |
-- |
13.8% |
-- |
|
Pre-Tax Profit (billions of pounds) |
1.07 |
2.45 |
-- |
2.55 |
4.3% |
|
Adjusted EPS (pence) |
10.8 |
23.7 |
-- |
24.9 |
5.1% |
|
Dividend per Share (pence) |
2.6 |
8.3 |
-- |
9.44 |
13.7% |
Source: Digital Look; company reports.
Earnings and dividends
In its results for the first quarter to June 30, BT reported adjusted EPS of 5.7 pence -- up 10% on last year's Q1 and its 11th consecutive quarter of double-digit EPS growth. However, if the analysts' consensus for full-year EPS growth of 5.1% is on the button, BT's earnings growth would moderate to less than 4% for the rest of the year. Adjusted EPS of about 11.5 pence for the first half would put the company on course to meet analysts' full-year expectations; anything less, and the market is likely to be disappointed.
More optimistically, if BT has maintained its Q1 earnings growth in Q2, look out for first-half adjusted EPS of around 11.9 pence, which could lead to earnings upgrades for the full year.
You may be surprised to see that analysts are forecasting dividend growth well-ahead of earnings growth, but BT stated in its last full-year announcement, "As a result of our confidence in our ability to grow free cash flow, we intend to increase our dividend by 10%-15% for the next three years." So look out for an interim dividend of between 2.8 pence and 3 pence.
Global services
BT has four lines of business: retail, global services, wholesale, and "Openreach." The performance of global services, which provides managed networked IT services to large corporate and public-sector customers, is worth keeping a particular eye on. In its FY 2012 final results, BT told us it expected global services to deliver solid EBITDA growth in FY 2013. However, Global Services' performance was disappointing in Q1, the business being "affected by the tough conditions in Europe and the financial services sector."
The table below shows the revenue and EBITDA performance for the last five quarters.
|
|
Q1 2012 |
Q2 2012 |
Q3 2012 |
Q4 2012 |
Q1 2013 |
|---|---|---|---|---|---|
|
Revenue (millions of pounds) |
1,905 |
2,014 |
1,894 |
1,996 |
1,730 |
|
EBITDA (millions of pounds) |
138 |
159 |
144 |
186 |
119 |
This year's Q1 revenue was down 9% on the same period last year, while EBITDA was down 14%. Global services will have some way to go in Q2 -- particularly with tougher comparatives -- to get back on track to deliver the solid EBITDA growth management was expecting. In September, BT announced it was appointing a new head of global services from Oct. 1, although, of course, whatever stamp he makes on the division will not be seen for a while yet.
A million and one
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