Telstra reports 26% drop in annual profit

10 Aug 2006

(Associated Press via NewsEdge) Australia's largest telecommunications company, Telstra announced that its full year net profit fell 26.2% on the back of lower earnings at its key fixed-line business.

In a statement, Telstra said net profit fell to A$3.18 billion ($2.43 billion) from A$4.31 billion ($3.30 billion) in the fiscal year, which ended June 30.

The result, which comes as the federal government prepares to decide on how it will offload its remaining 51.8% stake in the company, missed market expectations. The median estimate of nine analysts surveyed by Dow Jones Newswires was for a net profit of A$3.37 billion ($2.58 billion).

Telstra CEO Solomon Trujillo said the company expects to report growth of 4% to 6% in earnings before interest and tax (EBIT) for the fiscal year ending June 30, 2007.

Trujillo said the company expects underlying EBIT, which excludes costs related to his transformation strategy, to be flat to 2% lower for the current year. EBIT for the last fiscal year fell 20.7%, slightly better than Telstra's 21%-26% guidance range.

The result included a total provision of A$427 million ($327 million) redundancy and restructuring charges as part of Trujillo's five year turnaround plan.

'This result, delivered at the better end of our earnings guidance, reflects the fact that we are on or ahead of plan on virtually all fronts of our transformation,' Trujillo said.

c 2006 The Associated Press

c 2006 Dialog, a Thomson business. All rights reserved

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