Post-pay market drives Carphone Warehouse

Mobile phones retailer Carphone Warehouse has reiterated full year earnings guidance after a first half in which it gained market share in the UK post-pay market.

Headline profit before tax, which excludes contributions from discontinued businesses and one-off items, rose to £8.6m in the six months to the end of September from a restated £6.6m the year before. Statutory profit before tax jumped to £8.3m from £5.3m the year before.

Diluted earnings per share (EPS) increased by half to 1.5p from a penny a year earlier. Headline EPS rose 20% to 1.6p from 1.3p the year before. The group has reiterated its full year EPS guidance range of 11.5p to 13.0p.

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The company is dipping into its reserves to fund an unchanged interim dividend of 1.75p.

The 50% owned CPW Europe joint venture (JV) saw first half revenues up 1.6% on a like-for-like basis, with LFL revenues in the second quarter up 5.0%.

Headline earnings before interest and tax (EBIT) of £12.5m was down from £2.0.0m the year before, but ahead of guidance. Much of the fall was attributed to a weak pre-pay market. The group is sticking with its full year EBIT guidance range of £130m - £150m for the JV.

As for the 46% owned Virgin Mobile France JV, this saw revenue grow 9.2% on a constant currency basis. EBIT of £8.1m, up from £8.0m a year earlier, was in line with expectations. Full year guidance of a broadly unchanged EBIT (in euros) remains unchanged.

"We have substantially increased our market share of UK post-pay volumes and, while the pre-pay market remains weak, we hope for an improvement in the second half as the product pipeline continues to broaden," said Roger Taylor, Chief Executive Officer of Carphone Warehouse.

"In Continental Europe, we have also been exploring growth opportunities for the business through potentially long-term strategic partnerships. Virgin Mobile France has grown its revenue and post-pay customer base, despite intense competition, and is starting to benefit as it moves its customers onto its Full MVNO [mobile virtual network operator] infrastructure," he added.

JH