Royal KPN NV (KKPNY.PK, KKPNF.PK) said Tuesday difficult market conditions in the Netherlands and the non-repeat of last year's tax gain dragged its first-quarter profit down by 51 percent. The Dutch telecommunication firm also confirmed its 2012 guidance for lower EBITDA, highlighting the year as a transition year for the Netherlands.
CEO Eelco Blok said, "The overall performance of the KPN Group in the first quarter of the 2012 transition year was according to plan... Needless to say, the current financial performance of the company is not in line with our medium to longer term ambition. Group profits and cash flow are planned to improve in the second half of 2012, driven by a better performance in our Dutch businesses."
Initiating a forecast in January, the company had warned that it expects lower profits and cash flow in 2012. It had also said its investment strategy would result in a sustainable level of profit for the Netherlands. The company noted today it expects a sustainable level of profit for the Netherlands from end-2012 onwards.
The company also said today it continued to make progress with its Dutch cost reduction program. It intends to complete the program by the end of 2013, two years earlier than originally planned. The company added that it has set a tough but achievable target for its headquarters to reduce costs by 30-40 percent by 2013.
In the first quarter, KPN's net profit attributable to equity holders fell 51 percent to 288 million euros and earnings per share declined 49 percent to 0.20 euros. The prior year results were positively impacted by the one-off benefit of 150 million euros related to the innovation tax facilities for the period 2007 - 2010.
Revenues fell 1.2 percent to 3.16 billion euros. The company attributed this to continued difficult market conditions and regulation in the Netherlands, partly offset by increased revenues in Germany, Belgium and KPN's U.S.-based voice carrier unit iBasis.
EBITDA - a key earnings metric - declined 13 percent and EBITDA margins contracted, hurt by performance of Dutch Telco due to a decline in traditional high margin services, investments to strengthen the domestic market positions and difficult market conditions.
For fiscal 2012, the company continues to project EBITDA, excluding restructuring costs, between 4.7 billion and 4.9 billion euros, and free cash flow between 1.6 billion and 1.8 billion euros. The company's fiscal 2011 adjusted EBITDA was 5.268 billion euros and free cash flow was 2.449 billion euros.
Further, the company confirmed its dividend outlook for 2012 at 0.90 euros per share.
In Amsterdam, KPN shares closed Monday's regular trading at 6.66 euros, down 0.24 euros or 3.49 percent.
by RTT Staff Writer
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