Cable & Wireless Fiscal Year Ebitda +23%; Mulls Demerger

LONDON -(Dow Jones)- International telecommunications company Cable & Wireless, Thursday reported a 23% rise in earnings before interest, taxes, depreciation and amortization for the year to March 31, beating expectations, and said the company's board would consider a de-merger of its U.K. and international division.

"The board will consider all options and de-merger is an option," Tony Rice, the group finance director said in a conference call.

There has been persistent speculation that the company will demerge its two business units since January, when it split itself into separate domestic and international divisions.

The FTSE-100 company said its closely-watched Ebitda before exceptional items rose 23% to GBP605 million, from GBP492 million a year earlier. Revenue was GBP3.15 billion compared with GBP3.35 billion the previous year.

Net profit more than doubled to GBP191 million versus GBP92 million and group operating profit rose almost 40% to GBP284 million compared with GBP203 million last year.

Ebitda and net profit were above a Factset forecast of 17 analysts, which forecast Ebitda at GBP598 million and net profit at GBP174 million. But revenue was slightly lower than the forecast GBP3.2 billion.

The steep rise in net profit was the result of a big step up in margins for the Europe, Asia and U.S. (EAUS) unit, which is growing from a low base and subject to steady interest and tax charges.

In the group outlook for 2008 to 2009, the company said it expects Ebitda in the range of GBP702 million to GBP725, representing growth of between 16% and 20%.

The full-year results are "strong", the results have delivered of exceeded every element of guidance and the company's outlook is upbeat, said a London-based analyst who asked not to be named.

At 0718 GMT, the stock was up 3 pence, or 2%, at 156 pence, the biggest percentage increase on the FTSE 100. The shares have fallen over 15% since the beginning of the year over concerns that the company won't be able to meet annual revenue growth targets of between 5% and 8%.

Martin Mabbutt, analyst at Nomura, said that the results were "more or less" in-line with expectation although exceptional charges were higher than expected.

The company reported exceptional costs of GBP40 million for its Europe, Asia a & U.S. division "largely attributable to restructuring costs including redundancies and property costs".

-By Erica Herrero-Martinez, Dow Jones Newswires; 44 20 7842 9353; erica.herrero-martinez@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 22nd May 2008