Carphone earnings up 18pc

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Carphone Warehouse Europe reported earnings before interest and taxes of £114 million, up 18 per cent year-on-year.

It said the growth was down to an increase in smartphone contracts, however, connections for the year were stagnant with just 0.2 per cent growth from 12,469 in 2009 to 12,296 last financial year.

It grew its store estate across Europe from 2,240 to 2,224 in the year, while revenue increased by three per cent.

Carphone said revenue was in line with expectations, with £100 million in Group cash following the demerger of its fixed line business. It also spent £21 million in its Best Buy UK operations. Free operating cash flow before Best Buy UK investment was at around £170 million, and Best Buy Europe ended the year with net funds of £60 million, compared with a net debt of £47 million at March 2009.

The Group’s share of Virgin Mobile France was at a loss of £9 million for the year, but said its customer base was at 1.7 million, with net growth of 30,000 in the fourth quarter of the year.

Carphone Warehouse chariman Charles Dunstone said: “We have ended 2010 with another strong performance and given our third upgrade in six months. Best Buy Mobile US is out-performing even our expectations. Carphone Warehouse Europe continues to trade strongly with like-for-like revenue up 3 per cent in the fourth quarter. Our full year results are ahead of expectations and our operating free cash flow is well ahead and represents a transformational improvement on the prior year.

“The demerger is now successfully completed, and we are moving into our next phase of growth. Our vision of the ‘Connected World’ resonates with customers, as do our principles of impartial advice and knowledgeable service. This Friday, we open our first UK Best Buy ‘Big Box’ store; Best Buy Mobile continues to show good potential in the US; Carphone Warehouse Europe continues to roll out its ‘Wireless World’ format; and Virgin Mobile France is now moving into profit.

“The macro environment will undoubtedly present challenges but we are well positioned in each of our businesses and we are targeting 40 per cent to 45 per cent EPS growth for our 2011 financial year with further strong cash generation in both of our joint ventures.”

Next year, it expects earnings before interest and taxes to grow between 15 to 20 per cent for Carphone Warehouse Europe with similar growth in Best Buy Mobile profit share and a loss of £40 to £45 million for Best Buy UK.

 

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