Friday, May 23, 2008

C&WJ loses $4b - Parent profit dips

Published: Friday May 23, 2008

Telecommunications company Cable & Wireless Plc said it was considering a demerger of its business units after it posted a 5.7 per cent drop in full year net profit Thursday.

The Jamaican company also released results to the Jamaica Stock Exchange that were below expectations. Released after market close, C&WJ reported a $4.2b loss off lower revenues of $23 billion.

The stock dropped two cents to close at $0.76.

It was also announced in a stock market filing that Richard Dodd, the CEO of Cable and Wireless Caribbean, had joined C&WJ's board.

Cable & Wireless Plc reported a profit of £164 million (US$321 million; €206 million) for the year ending March 31, compared with £174 million a year earlier when the bottom line was boosted by the sale of its Bahrain unit.

Revenue fell 5.8 per cent to £3.15 billion (US$6.17 billion; €3.96 billion).

Chairman Richard Lapthorne said the move had "brought increased focus to both businesses," which sell voice, Internet and wireless networking services.

"We will look at all options," Finance Director Tony Rice said, adding that it could include a break-up, the sale of some businesses, or borrowing money to return capital to shareholders.
"We're talking about doing something in 2008 and 2009."

Shares tumbled

The company forecast in March that sales at its Europe, Asia and US division would increase 5 per cent to 8 per cent annually for the next five years, but its shares tumbled as analysts questioned whether the company would meet sales and cash-flow targets.

The stock rose 2.7 per cent Thursday to 156.6 pence (US$3.10; €1.97).

Collins Stewart analyst Mark James said he expected the shares to slip before a demerger announcement.

"The demerger is widely anticipated and these shares have already rallied from the lows post the March investor day disappointments," said James.

Earnings before interest, taxes, depreciation and amortisation in the international unit rose 2.7 per cent to £830 million (US$1.6 billion; €1.02 billion) from £808 million.

The company's Jamaica unit underperformed, but the company said it expected "further improvements" there.

Harris Jones unexpectedly stepped down as chief executive of the international division and as a director of the company in November.

John Pluthero was appointed executive chairman of the international division, while continuing in the same role in the Europe, Asia and U.S. division.

Earnings before interest, taxes, depreciation and amortisation at the company's Europe, Asia and U.S. unit more than doubled to £219 million (US$434.1 million; €275.5 million).

Last year, the company cut its global work force by nine per cent, bringing the total number of employees to around 5,000, as part of a wider cost-cutting strategy.

Source: Jamaica Gleaner

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