Dutch telecom KPN Q2 earnings down by 12%
Restructuring charges, higher financing costs and taxes have led to a fall in KPN’s net profit but underlying performance was still better than predicted.24 July 2008
AMSTERDAM - The Dutch telecommunications company Royal KPN NV said Wednesday its net profit fell 12 percent in the second quarter, due to restructuring charges, higher financing costs and taxes.
However, analysts said the company's underlying performance was better than expected and shares rose 5.1 percent to EUR 10.65 in Amsterdam.
The company said net profit was EUR 353 million, down from EUR 401 million a year ago, while sales were up 22 percent to EUR 3.66 billion.
Notably, the company added 780,000 customers at its German mobile telephone arm E-Plus in the quarter, and it lost fewer fixed line customers in the Netherlands than in previous quarters.
The sales increase was largely due to KPN's EUR 766 million acquisition of Getronics, a major IT services company, in October.
KPN's financing costs rose as a result, and taxes also increased as the company was unable to continue taking deductions for past losses.
"Although the headline numbers of KPN sounded as being below expectations, the underlying figures were clearly better than expected," said Petercam analyst Thijs Berkelder in a reaction to the earnings.
KPN booked EUR 221 million in restructuring charges in the quarter, mostly due to a plan to cut 4,500 jobs by 2010. The company had 43,500 employees at year-end.
However, it benefited from a EUR 199 million windfall on its pension obligations after striking a new deal with unions.
[AP / Expatica]