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31 Jul 2020 | 07:17

BT first-quarter profit dented by Covid-19

(Sharecast News) - BT posted a decline in first-quarter profit on Friday as the coronavirus pandemic weighed on revenues. In the three months to the end of June, reported pre-tax profit fell 13% to £561m as revenue dropped 7% to £5.2bn, "primarily due to the impact of Covid-19", including reduced BT Sport revenue and a reduction in business activity in its enterprise units.

Adjusted earnings before interest, tax, depreciation and amortisation were down 7% to £1.8bn, driven by the fall in revenue and continued investment in customer experience, partly offset by Covid-19 mitigating actions and savings from the company's transformation programmes.

BT said the first quarter was "impacted heavily" by the coronavirus crisis. With limited sport to broadcast, revenues from both residential customers and pubs and clubs declined. Trading was also hit by the closure of its retail stores, although increased digital transactions and improved churn provided some mitigation.

In the enterprise business, revenue was down mainly due to ongoing declines in legacy products and sharply reduced business activity due to the pandemic. In particular, the SME segment saw lower call volumes, and fewer sales and upgrades across both fixed and mobile.

Despite ongoing uncertainty, the company said it was now able to give guidance for this financial year. It expects adjusted revenue to be down between 5% and 6% in 2020/21 and adjusted EBITDA of between £7.2bn and £7.5bn.

Beyond this year and based on current expectations, it expects to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19.

Chief executive Philip Jansen said: "Despite Covid-19, BT delivered a strong operating performance in the first quarter and delivered a relatively resilient set of financial results."

At 0930 BST, the shares were down 2.2% at 105.45p.

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