Revenues at BT Global Services have been hit by the tough economic conditions in Europe, the company reported in its first quarter results.
The division’s revenue was down nine percent year-on-year to £1.7 billion in the 12-week period to 30 June 2012, thanks in part to lower order values, despite it signing contracts with Rolls Royce, Tesco and Unilever in the quarter.
“Total order intake was £1.1 billion in the quarter, down from £1.6 billion last year, reflecting the market trend towards lower order values and longer lead times,” BT said in its results.
The Rolls Royce contract covered network infrastructure at 55 sites in six countries, while the Tesco contract was for cloud-based contact centre services and the Unilever one for global network optimisation services.
BT also signed a contract with Brazil’s state-owned development bank, Caixa Econômica Federal, to connect additional branches, which is significant because in its previous quarterly results, the company said that it was taking steps to ensure its future growth by investing in newer markets, such as Latin America, Asia Pacific and Turkey, the Middle East and Africa.
At nine percent, BT Global Service’s experienced the greatest fall in revenue of all the group’s divisions, followed by BT Wholesale (eight percent drop) and BT Retail (three percent drop).
Despite the revenue decline, BT Global Services’s operating loss continued to narrow, falling three percent from £37 million in 2011 to £36 million this year. The division was able to reduce its net operating costs by nine percent, due to initiatives such as supplier contract renegotiations, increased use of shared service centres for contract delivery, rationalisation of third-party circuits and lower IT costs.
BT’s overall group revenue decreased six percent from £4.8 billion last year to £4.5 billion in this quarter, but pre-tax profit was £578 million, up eight percent.
Ian Livingston, BT’s chief executive, said: “We have delivered another quarter of profit growth and the eleventh consecutive quarter of double digit earnings per share growth.
“There were good performances in BT Retail, BT Wholesale and Openreach, while BT Global Services was impacted by the tough conditions in Europe and the financial services sector.”
He added: “We continue to make good progress with our investments in the faster growing economies.”