Carphone Warehouse posts strong six-monthly results

Telco beats expectations with revenue of £789m

Carphone Warehouse's half-year revenues rose 13 per cent year on year

Carphone Warehouse has announced its interim results for the past six months, showing a strong performance ahead of market expectations.

Figures released today for the period ending 30 September show revenue of £789m, up 13 per cent on the same period for 2008, and a profit after tax of £54m.

The company's TalkTalk division operated a free cash flow of £75m, while the Best Buy Europe division, in which Carphone Warehouse has a 50 per cent stake, operated at £47m free cash flow.

Carphone Warehouse chief executive Charles Dunstone said that this represented "a significant year-on-year improvement in operating cash flow", and that the company will be "raising guidance for the full year to March 2010".

Tiscali has also performed well since its acquisition by TalkTalk for £235m in July, showing growth in the broadband customer base up 46 per cent year on year. Without including Tiscali, the figure was up five per cent year on year.

Carphone Warehouse also noted that mobile connections were up two per cent to 5.9 million, despite increased competition from the likes of Apple's iPhone, but that "the handset market remains subdued".

Best Buy Europe generated total revenues of £1,674m, representing growth of four per cent, although its earnings before tax and interest were down slightly from £35m to £32m on the same period last year.

The demerger of TalkTalk and Carphone Warehouse remains on schedule to be completed by the end of March 2010.

This will result in two separate companies being listed on the London Stock Exchange. TalkTalk Group will have primary listing, and Carphone Warehouse Group and will have a secondary listing.

Ian Fogg, a principal analyst with Forrester, suggested that TalkTalk "would face a challenge" trying to bring together the various entities it now owns.

"TalkTalk has grown through organic growth and acquisitions in recent years, " he said. "The key focus now as it goes forward will be to streamline these areas into one business."

Fogg also maintained that the demerger represents the growing consolidation of mobile and broadband markets as smaller companies like Tiscali are being bought out after several years of fierce competition.

"This could lead to lower costs, but it could also mean less choice on the market," he concluded.