eircom increases profits despite revenues fall
Revenues at eircom fell by 2% in the year to end of March, but lower operating costs allowed the company to increase overall profitability.
Profits before restructuring programme costs and exceptional operating charges/credits rose by 73% from €142m to €246m in the year, while operating margin profit before restructuring programme costs and exceptional operating charges/credits was up 15%.
Headcount was cut by 668 to a year-end total of 7,275. The company has a target of 7,000 employees by 2008.
The proposed final dividend is 6 cents, giving a total dividend of 11 cents per share for the full year.
Eircom chief executive Dr Philip Nolan said: "In a highly competitive marketplace a revenue decline of 2% has been in line with our expectations. Nonetheless underlying profitability has increased due to lower operating costs, increased efficiency of service delivery, and improved gross margin.
"Our capital spend has been on plan at €209m and the company’s cash generation remains strong."
In today's preliminary results, eircom said it now had more than 140,000 broadband customers, but admitted further incentives were needed to encourage customers to make the switch to broadband.
"The investment in customer acquisition will require greater price stimulation than previously assumed, and we are committed to further innovation in product, pricing and promotions to deliver our stated goal to achieve 500,000 users by December 2007," Dr Nolan said today.
While the eircom chief executive would not be drawn on specific questions relating to eircom's reported bid for mobile phone company Meteor, he agreed eircom was committed to re-entering the mobile phone market.
"We have consistently stated that our re-entry must be achieved on terms which are commercially sensible to us and we remain engaged on all aspects of potential re-entry routes," he said.
