Cable & Wireless Worldwide cut its full-year forecasts yesterday, claiming savage public sector spending cuts in the UK has hit business hard.
The UK-based carrier said ebitda would likely fall at the lower end of its forecast of £452 million ($691m) to £484 million, and that it was accelerating cost-cutting schemes in a bid to reduce operating expenses for fiscal 2010, which runs to March 31 2011.
“Non-contracted spending in the UK public sector has slowed very significantly,” the firm said in a statement noting that the slump will “adversely impact trading in the current year.”
UK public sector contracts accounted for 12% of group revenue in 2009, FT.com reported.
The new British government unveiled heavy spending cuts in an emergency budget last month, aiming to shed £113.5 billion from public sector spending over the next five years
CEO Jim Marsh conceded the firm had been caught out by the speed with which the government cuts were implemented, noting that some of the biggest deals have already been delayed or suspended, Bloomberg reported.
C&WW’s London-listed stock closed at 69p, down 14.55p, after release of the lower forecast, but rebounded slightly to 70p in early morning trading.