Pension writedown flattens C&W Worldwide earnings

Robert Clark & Michael Carroll
27 May 2010

Cable & Wireless Worldwide has broken even in its first result following its demerger, following a hefty pensions writedown, bonuses and one-off operating costs.

The company, which operates carrier and enterprise services, announced 32% higher ebitda of £431 million ($621.2m) on sales of £2.3 billion.

It last year separated from the Cable & Wireless group, which now manages retail fixed and mobile services in the Caribbean.

But it carried a one-off £143 million loss because from the unfunded portion of the company pensions plan, along with £54 million in exceptional operating costs and £14 million for bonuses.

The company last month revealed that at its top 40 managers had shared a £9 million pay-out under its bonus scheme, based on share price performance, reported. Last year it paid out £35 million in executive bonuses.

Revenue was flat compared with 2009, due to the recession in the UK, regulatory changes, and downward pressure on the firm’s voice and legacy systems.

But sales from the IP and data center group were up 18%, and gross margin was 47.5% of total sales, 41.5% higher than a year ago.

CEO Jim Marsh said the firm had “built a strong platform for growth,” in the coming years.

He said the carrier would continue to invest in its global network, by completing its Europe/India Gateway, and participating in the deployment of the West Africa Cable System.

He expected it would meet its targets for ebitda growth and cash generation over the next 12 months, noting it already generates 72% of its margins from data.

Richard Heap, head of Telecoms at global accountancy firm BDO, said the results show C&W Worldwide has turned a corner, adding that the firm is “quite rightly positioning itself in the emerging markets, such as India and West Africa, and moving itself further away from the predominantly UK business it once was.”

C&WW’s London stock price closed at 79.45p, up 3.48p.

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