C&W turns in strong performance but stock falls on forecast

22 May 2009

Cable & Wireless yesterday reported a strong annual performance, boosting group revenue 16% to £3.646 billion ($5.73 billion) for the year to March 31.

But the stock fell 9.55% on Thursday after its 2009-10 guidance fell short of analysts\' expectations.

Group ebitda before exceptionals of £822 million grew £217 million (36%), driven by £138 million (23%) of growth, £78 million from worldwide (formerly Europe, Asia & US) and £60 million from the international group, CWI.

The figures were also helped by £29 million (5%) of additional ebitda following the acquisition of Thus and the "associated ebitda synergies". In addition, the company benefited from £50 million (8%) in forex gains due to the sterling\'s weakness.

Chairman Richard Lapthorne said ebitda for the three main groups were all ahead of guidance for 2008/09. Worldwide ebitda was up 49% from last year to £326 million and CWI ebitda up 11% to $921 million.

He added, "We\'re well aware that the recession provides a degree of uncertainty but our current view is that we have a robust set of plans that will allow us to progress further in 2009/10. Consequently, we\'re guiding to an increase in ebitda to over £1 billion and we expect a substantial increase in cash generation.

Shareholders have long been keen to release value from the company by spinning off the UK and international business, but Lapthorne said, "Whilst our trading position is in good health, as announced last autumn we have postponed, but not canceled, our value realization plans until we can foresee a sustained period of normality returning to the credit and equity markets."

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