Dutch telecommunication firm Royal KPN NV (KPN,KKPNY.PK, KKPNF.PK) posted Tuesday a 54 percent decline in its first-quarter profit hurt by the sale of Getronics International, competitive mobile markets as well as the continued decline of traditional services. The company also decided not to pay dividends for 2013 and 2014.
Looking ahead, the company said it is on track to realize its previous outlook. The company continues to expect the Netherlands to stabilize towards 2014, and that next phase in the German strategy would lead to service revenue growth combined with lower EBITDA margin, especially in 2013.
Meanwhile, KPN adjusted its dividend outlook, by deciding not to pay dividend for the financial years 2013 and 2014, citing the expected launch of the rights issue of up to 3 billion euros shortly after the first-quarter results and the higher number of shares following the issue.
After 2014, the company will resume dividend payments, subject to operational performance and financial position. Initially, it had plans to pay dividend of 0.03 euros per share for 2013 and 2014.
Commenting on the first-quarter performance, Chief Executive Officer Eelco Blok said, "KPN's performance in the first quarter was on track with the updated strategic agenda we presented in February. We see the success of our strategy in The Netherlands in the continuing momentum in TV and broadband, and the launch of 4G services as first mover. In the last months, we have taken important steps to strengthen our financial position."
In its first quarter, net profit attributable to equity holders was 138 million euros, significantly down from last year's 306 million euros. Earnings per share fell 55 percent to 0.10 euros from 0.22 euros a year ago.
Earnings before interest, tax depreciation and amortization or EBITDA, a key earnings metric, declined 12 percent to 994 million euros. EBITDA margin dropped to 34.1 percent from 35.4 percent last year. The decline mainly reflected higher commercial investments supporting growth in postpaid net adds and data revenues in Germany.
For the first quarter, revenues and other income totaled 2.91 billion euros, 8.8 percent lower than last year's 3.19 billion euros. The company attributed the decline to the sale of Getronics International and declining revenues at NetCo, Business, Germany and Consumer Mobile segments.
On an underlying basis, revenues were down 4.3 percent.
Revenues from The Netherlands fell 11 percent and the decline was 6.6 percent in Mobile International. In Germany, higher hardware sales to support the uptake of data propositions offset a decline in underlying service revenue due to competition and lower usage in the prepaid segment and continued customer optimization.
In Belgium, underlying revenues increased even as underlying service revenue growth slowed down as a result of increased competition in the mobile market.
According to the company, traditional wireline services showed a continued decline in both access lines and traffic volumes.
In Amsterdam, KPN shares are currently trading at 2.75 euros, up 0.03 euros or 1.18 percent.
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