KPN: profit, revenues below expectations in 1Q09

28 Apr 2009

Dutch incumbent KPN Telecom (or Royal KPN as it is also known) said its first-quarter net profits dipped 5.3% year-on-year on the back of falling demand at its IT services arm Getronics. The telco said net income reached EUR317 million (USD413 million) in the three months ended 31 March 2009, compared to EUR335 million in the corresponding period a year ago, on sales which fell 4.9% to EUR3.53 billion. Earnings before interest, taxes, depreciation and amortisation (EBITDA) reached EUR1.23 billion, missing the average forecast of EUR1.27 billion in a Reuters poll of analysts. In a statement KPN said it ‘experienced no impact from the economic downturn in its consumer markets, other than a decrease in roaming revenue, but the impact in the business markets is now apparent… Order intake in the business market is slowing down and order conversion is taking longer.’ The group’s IT services unit posted a loss on continuing operations of EUR15 million in 1Q09, reversing a profit of EUR20 million at the same time a year earlier. KPN acquired Getronics for EUR766 million in October 2007.

KPN has been looking to cut costs in recent years and has been steadily reducing its workforce, shedding some 7,000 staff since 2005 – of which 1,000 were lost in the first quarter of 2009 alone. The Dutch telco said its core business operations reported modest growth in the period under review and stronger expansion in Germany for its mobile unit E-Plus, helped offset a small decline in its home market. ‘In the consumer markets both in the Netherlands and internationally we see limited impact of the recession. In the course of the first quarter, however, we have seen economic conditions deteriorate more quickly,’ chief executive Ad Scheepbouwer said in a statement. KPN now expects an additional restructuring charge of EUR30 million in 2Q09 for Getronics, but it is keeping its target of EBITDA of at least EUR5.5 billion for 2010. It is, however, revising its revenue outlook for 2010: the operator expects 2010 revenue to be slightly higher than the EUR14 billion booked in 2008. Previously, KPN had predicted sales of more than EUR15 billion in 2010.

Netherlands, KPN