BT shares slide with half-year profits contracting 13%

BT shares slide with half-year profits contracting 13%

Multinational telecommunications company BT (LON:BT.A) saw its share price dip on Friday, after posting an unsurprising but hardly uplifting set of half year financial fundamentals.

While being praised by Ofcom for its provision of services during the lockdown period, BT listed the pandemic as a key contributor to negative impacts on its financial results.

This was reflected in both its revenues and adjusted EBITDA, both down 7% year-on-year. Its revenues fell from £5.53 billion to £5.25 billion, while its adjusted EBITDA contracted from £1.96 billion to £1.81 billion.

This led to a fall in the company’s profits before tax, which were down 13%, from £642 million, to £561 million. Similarly, the company’s net debt grew by £352 million, from £17.81 billion, to £18.16 billion.

Operationally, the company said that it had re-opened the majority of its stores, and that repair activity and the roll-out of FTTP had resumed.

BT response

Commenting on the results, Chief Executive, Philip Jansen, stated:

“Openreach resumed provisioning and repair activity in customer premises, we re-opened the majority of our retail stores, and we saw the restart of the Premier League on BT Sport. Enterprise has today launched the BT Small Business Support Scheme, which will boost cash flow, connectivity and confidence among this critical segment of the economy over the coming months.”

“Throughout this crisis we remain focussed on delivering against our strategic goals to deliver long-term value for shareholders. We reached an important milestone with 3m FTTP premises now passed, welcomed Ofcom’s consultation on our rural FTTP build proposal, and have now deployed 5G to 100 towns and cities. Together with continued improvements in customer experience and our modernisation programme, we are positively positioned for the future.”

“Although uncertainties remain, we are now able to provide an outlook for this financial year. Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold. Beyond this year and based on current expectations, we expect to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19.”

Investor insights

Following the news, BT shares dipped 3.51% or 3.78p, to 104.07p per share 31/07/20 12:41 BST. This is below its current consensus target price of 153.13p per share, and far off of its February highs exceeding 162.00p per share.

The company’s p/e ratio is 4.59, its dividend yield stands at 4.43%.