16th Jul 2015 11:42
LONDON (Alliance News) - Dixons Carphone PLC Thursday reported growth in profit in its recently-ended financial year as sales continued to grow following the merger of Dixons Retail PLC and Carphone Warehouse PLC last year, and it continues to focus on developing its Connected World Services arm.
The FTSE 100-listed electricals and telecoms retailer said that pro-forma headline pretax profit in the year to May 2 rose 21% to GBP381 million from GBP316 million the year before, beating analyst forecasts. Pro-forma headline revenue grew 1.8% to GBP9.93 billion from GBP9.75 billion, and total like-for-like sales were up 6% on the prior year.
Based on the combined forecasts of four brokers compiled by Morningstar, analysts had expected pretax profit to come in at GBP375.8 million. Of the four, Exane BNP Paribas had the highest prediction of GBP380 million, while Investec held the lowest at GBP374.8 million.
Regionally, the UK and Ireland showed the biggest like-for-like sales rise of 8%, while the Nordics grew 4%, but Southern Europe declined 5%, hit by store closures and a tough marketplace in Spain.
Dixons Carphone said that the integration of the two merged businesses is progressing well and is expected to deliver at least GBP80 million of synergies by the financial year 2017, one year ahead of plan.
The retailer is currently focusing on a strategy to grow through service partnerships in its Connected World Services division. Connected World Services is Dixons Carphone's business-to-business arm, which aims to leverage the company's expertise, operating processes and technology to provide a range of services to businesses.
This push led to it disposing of assets earlier this year, including The Phone House Deutschland GmbH business, which it sold to German mobile virtual network operator Drillisch AG in April. That was followed in the same month by a deal to sell its 83% stake in The Phone House Netherlands BV to Relevant Holdings BV, a vehicle set up by Dutch telecoms retailer Optie1. In announcing the Dutch deal, Dixons Carphone said it would focus on developing its Connected World Services partnerships in the Netherlands.
On Thursday, Dixons Carphone said it also will dispose of its operations in Portugal. "Discussions, which commenced with potential acquirers during 2014/15, are advanced and an announcement confirming details of the disposal is expected in due course," the company said.
Earlier this month, Connected World Services signed a deal with US mobile carrier Sprint Corp to open and manage a number of Sprint-branded stores in the US. Dixons Carphone will initially supply mobile phone retail expertise to Sprint for 20 new stores, and if successful, the scheme will then be rolled out further with plans to open up to 500 stores.
In the second phase of the programme, Dixons Carphone will invest up to USD32 million to acquire a 50% stake in the joint venture with Sprint.
"We believe this is a very exciting opportunity for the future and provides a platform for the group to return to the US marketplace," the retailer said on Thursday.
Pro-forma headline revenue for Connected World Services grew to GBP130 million in the year from GBP78 million the year before, as pro-forma headline earnings before interest and tax rose to GBP8 million from GBP5 million.
Dixons Carphone will pay a final dividend of 6 pence, up from the 4p it paid the year before, taking the total dividend for the year to 8.5p from 6p, a 42% increase.
"The job is far from done. I am acutely aware that there is no room for complacency in a sector which has seen unprecedented change, bringing both opportunities and challenges. We have set ourselves ambitious goals, not only financial, but also in terms of driving customer happiness, building a completely integrated company and delivering a brand new global services business with CWS. To achieve these, we will need to exhibit creativity, energy, resilience and toughness of purpose. Nevertheless we are very optimistic about the road ahead," Chief Executive Sebastian James said in a statement.
In light of the UK government's recent Budget proposal to give local councils the authority to allow shops to extend their Sunday trading hours, Dixons Carphone's Chief Financial Officer Humphrey Singer told journalists on Thursday that the retailer would act in response to what customers want.
"We have always seen it as our job to provide what our customers want. Increasingly customers are getting used to and enjoying shopping whenever they want, and we're here to serve them whether it's online or in store," he said.
Singer added that Dixons Carphone had already budgeted and planned going forward for the implementation of the 'national living wage' for staff, also introduced in the Budget.
"The move by the government has perhaps come a bit quicker and more immediately than we might have originally anticipated, but everything is budgeted for, and we think it's the right thing to do to operate a good wage to our employees," Singer said.
UK Chancellor George Osborne revealed in his Budget speech last week that a 'national living wage' of GBP7.20 per hour would be introduced next year for over 25s, rising to GBP9 an hour by 2020, to supplement the current GBP6.50 minimum wage, which also applies to under 25s.
Shares in Dixons Carphone were down 0.4% at 459.53 pence Thursday early afternoon, having peaked at 471.90p following the pre-market announcement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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