BT on the right line

Full year underlying profits at telecoms titan BT were slightly ahead of expectations even though revenue was a bit on the light side.

Underlying profit before tax in the year to March 31st rose 17% to £2,421m, versus expectations of £2,412m. Earnings before interest, tax, depreciation and amortisation (EBITDA) edged up 3% to £6,064m.

Full year revenue slipped 4.0% to £19,307m, versus market expectations of £19,357m. Underlying revenue excluding transit revenue was down 1.9% for the year, within the group's target range.

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BT said it expects underlying revenue excluding transit to show an improving trend in 2013 and 2014, while in the same years it also expects growth in EBITDA.

Adjusted earnings per share climbed 13% to 23.7p, well ahead of market expectations of 23.17p, but the board was parsimonious with the dividend, increasing the full year pay-out to 8.3p, compared to the 8.73p expected by the market.

BT said dividends should grow by 10% to 15% a year for the next three years.

"In what remains a challenging environment we have delivered another year of growth in profits and free cash flow. Our financial strength has allowed us to invest in the business, make a £2bn payment into the pension fund, reward employees and deliver double digit growth in shareholder returns," said Ian Livingston, Chief Executive of BT.

JH