Carphone Warehouse's profits edge up

Carphone Warehouse, the seller of hand-held mobile communication devices, saw full year profits rise once the effects of the Best Buy Mobile sale are stripped out.

Using what it terms "headline" figures, which essentially remove from the equation bits of the business which have been sold, the group saw profit before tax rise to £58.3m from £56.3m. Carphone Warehouse (CPW) sold its share of Best Buy Mobile's US and Canadian businesses for £838m late last year, which largely accounts for the sharp rise in statutory profit before tax from £65.6m the previous year to £762.5m.

CPW Europe's revenue declined 5.5% to £3,313.1m from £3,504.8m the year before, largely in line with management's expectations. On a like-for-like basis, revenue was down 4.6%, which management attributed to structural changes in certain European markets.

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A lack of attractively priced smartphone products in the pre-pay segment and a weak consumer environment caused a drop of 30-40% in pre-pay volumes in some markets. This had an impact on revenue, but a limited effect on profitability.

CPW Europe's earnings before interest, tax, depreciation and amortisation (EBITDA) firmed to £129.6m from £219.1m a year earlier, while EBIT improved to £135.0m from £134.6m, leading to a rise in the EBIT margin to 4.1% from 3.8%. The gross margin percentage increased by to 28.6% from 28.4% the year before.

The Virgin Mobile France division saw revenue grow 19% to £390m from £328m the previous year, while EBIT was up 4% to £22m from £21m the year before.

Carphone Warehouse said guidance for the current financial year is for CPW Europe's headline EBIT to be somewhere between £130m and £150m, and for Virgin Mobile France's revenue growth to be in the range of 5% to 10%. Group headline earnings per share (EPS) is tipped to be in the range of 11.5p to 13.0p, versus headline EPS of 12.6p for the financial year just finished.

"Looking ahead, we expect the consumer environment in Europe to remain difficult, but we see opportunities as well as challenges and we are confident in our strategic positioning and operational execution," said Roger Taylor, Chief Executive Officer of Carphone Warehouse.

A final dividend of 3.25p has been proposed, leaving the full year pay-out unchanged at 5.0p.

The shares were up 3.5p at 134.5p in mid-morning trading.

JH