C&W confirms £780m profits guidance for year

Cable & Wireless has confirmed its November guidance for profits of £780 million in the year ending in March and said it was well positioned for the coming financial year. It raised its guidance last November from £725 million, on the basis of an average sterling-dollar exchange rate of $1.88.

Richard Lapthorne, Chairman of Cable and Wireless plc, said, "Our two businesses are performing very much in line with our expectations. We remain alert to the economic environment but we continue to trade strongly"&brkbar;, we are confident that we are well positioned going into 2009/10."

The division that offers ITC services to large organisations competes directly with BT's ailing Global Services unit. Of this Lapthorne said,  "Europe, Asia and US has maintained progress, winning significant new business and gaining market share, as well as renewing contracts with major customers."

Toward the end of January BT Gobal Services announced a write-down of £340 million in its third quarter to cover a shortfall in earnings from contracts, whereas as the Financial Times points out, C&W said its division had won new business recently. This includes a £79 million five-year contract to supply British energy company Centrica, a three year contract to provide a new call centre for the UK's Lloyds TSB Asset Finance, and a three-year contract for a managed voice and data network for Wm Morrison, the British supermarket chain.

The division also benefitted from the acquisition of smaller rival Thus lat October, which Lapthorne said was on track to contribute £23 million of profits and £7 million of savings (in part by shedding 600 jobs, according to the BBC)  to the division's forecast for earnings before interest, taxation and depreciation (ebitda) of £325 million.

C&W's larger international division, which acts as a local telecoms operator primarily in former British colonies around the world, is due to report ebitda of at least $910 million (€707.95).

Here again, business had been "resilient" according to Lapthorne, despite increased competition in many of its markets: for instance, Panama recently awarded two new mobile licences to rivals.

Lapthorne said, "early results are encouraging" of the restructuring programme in the Caribbean, which reorganised 13 separate operations in different islands into one with a new brand. He claimed the reorganisation and subsequent reduced costs gone some way to offset the effect of fewer tourists.

In November the group postponed plans to demerge the two divisions saying market conditions were too adverse.

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