BT Group Margins Lagging Those of Comparable Telcos
As European telecoms companies face the prospect of more cost cutting as their margins get squeezed, we are pleased to offer a complimentary download of Wright Investors’ Service’s analysis of BT Group (BT.A)
Selected highlights:
On the £21.39 billion in sales reported by the company in 2009, the cost of services sold totalled £9.10 billion, or 42.5% of sales (i.e., the gross profit was 57.5% of sales). This gross profit margin is very slightly better than the company achieved in 2008, when cost of services sold totalled 42.8% of sales.
The company’s earnings before interest, taxes, depreciation and amorization (EBITDA) were £3.38 billion, or 15.8% of sales. This EBITDA margin is worse than the company achieved in 2008, when the EBITDA margin was equal to 27.8% of sales.
The three comparable companies had EBITDA margins that were all higher (between 22.1% and 36.5%) than that achieved by BT Group PLC.
In 2009, earnings before extraordinary items at BT Group PLC were -£83.00 million, or -0.4% of sales. This profit margin is lower than the level the company achieved in 2008, when the profit margin was 8.4% of sales. The company’s return on equity in 2009 was -1.5%. This was significantly worse than the already high 41.0% return the company achieved in 2008. (Extraordinary items have been excluded).
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