BT posts stronger growth but misses targets

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BT posts stronger growth but misses targets

BT has reported 61% growth in profits after taxation for its second quarter but admitted that it would not be able to meet its own three-year financial targets.

The targets were set in April by chief executive officer Ben Verwaayen, who conceded today that it was "unlikely" that BT's three-year revenue target of 6% to 8% compound annual growth could be achieved. He added, however, that market expectations for the second half of the year would be met.

BT's operating profit grew 11% to £729m, compared with £657m in the second quarter of last year. Profits after taxation rose to £331m in the quarter, compared with £206m last year, an increase of 61%.

Pre-tax profits rose to £496m, compared with £321m in the same period last year.

BT attributed the growth in operating and after-tax profit to continued cost-cutting measures, reduced interest costs paid on BT's debt, reduced losses in its overseas activities and improved performance in its retail operations.

The company has continued to chip away at its previously crippling debt load, reducing total borrowings by £285m during the quarter to £13.1bn. Its debt load will be further reduced by £2.5bn once BT sells its stake in French telecom company Cegetel to either Vodafone or Vivendi.

BT expects future revenue growth to come through the development of "new wave initiatives", which the company defines as "information, communications and technology (ICT), broadband and mobility products".

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