27 November, 2009
UPDATE 3-Carphone ups earnings view, confident on Christmas
* Raises full-year EPS guidance to 14-15 pence a share
* H1 underlying EPS 6 pence, vs forecast 5.4 pence
* On track to demerge by end of March
* To accelerate Wireless World rollout; megastores on track
* Shares up 1.7 percent within midcap sector down 0.1 pct
(Adds FD, analyst comments, shares, detail, background)
By Mark Potter
LONDON, Nov 27 (Reuters) - Carphone Warehouse (CPW.L), Europe's biggest mobile phone retailer, raised its full-year earnings forecast and said it was "quietly confident" about Christmas trading, adding to signs of a consumer recovery.
The group, whose TalkTalk arm is Britain's second-biggest broadband provider behind BT (BT.L), also said it was on track to split into two businesses by the end of March and was speeding up the roll-out of its smaller Wireless World stores.
"We're quietly confident for Christmas," finance director Roger Taylor told Reuters on Friday, after Carphone beat forecasts with an 88 percent rise in first-half earnings.
He saw strong demand for smartphones like Apple's AAPL.L iPhone as well as cheaper prepay touchscreen phones only available on contracts last year, and for laptops following the launch of Microsoft's (MSFT.O) Windows 7 operating system.
Carphone's comments reinforced indications of a recovery in consumer spending after a brutal downturn in late 2008 and early 2009.
A survey on Thursday showed British retail sales rising at their fastest pace for two years, while rival electricals retailer DSG (DSGI.L) posted a smaller-than-expected first-half loss. [ID:nGEE5AP154] [ID:nGEE5AO0G9]
Like its peers, however, Carphone remained cautious about prospects for 2010, when taxes are likely to rise to reduce government borrowing. [ID:nLK700314]
"I don't see a huge, big upturn," Taylor said in a telephone interview. [ID:nGEE5AQ0C4]
At 0850 GMT, Carphone shares were up 1.7 percent at 195.7 pence, outperforming a 0.1 percent decline on Britain's midcap stocks index .FTMC.
Carphone shares fell three quarters in value in 2008 as the recession hit but have recovered about half of that loss this year, beating both the DJ Stoxx telecoms .SXKP and retail SXRP indexes.
The rebound has been helped by plans to split the company into two -- telecoms business TalkTalk Group Plc and retail business Carphone Warehouse Group Plc, which is a joint venture with U.S. electricals retailer Best Buy (BBY.N).
Some analysts think the two companies will be valued more highly by investors when they are separate.
RAISING FORECASTS, SPEEDING GROWTH
Carphone, with over 2,400 stores across nine countries, said it made underlying earnings per share of 6 pence in the six months to Sept. 30, beating analysts' average forecast of 5.4 pence in a company poll.
It raised its full-year earnings forecast to 14-15 pence, compared with analysts' current average estimate of 13.7 pence.
"The results indicate an improving profitability profile coming through at both TalkTalk and Best Buy Europe, with management's focus on cash generation now starting to show through," Credit Suisse analysts said, keeping an "outperform" rating on Carphone's shares.
Taylor dismissed speculation that the retail business's plans to open consumer electrical megastores next spring would be disrupted by the retirement of Bob Willett, the head of Best Buy's international business. [ID:nN11359966]
He said the joint venture planned to have 10 megastores open by around this time next year. It has named the first two sites, which will open in the spring, and will name two more next week, he added.
Taylor also said the venture was accelerating the roll-out of smaller format Wireless World stores, after initial trials had performed beyond its expectations.
It hopes to have 40-50 Wireless World stores trading by the end of March and more than 100 a year later, he said.
First-half revenues rose 13 percent to 789 million pounds ($1.3 billion) and the interim dividend was lifted to 1.45 pence a share from 1.35 pence at the same time last year.
Carphone said TalkTalk would pay a dividend equivalent to the current progressive policy of the group, but Carphone Warehouse would not make a payout for at least two years.
Shareholders will be allotted stock in both businesses. ($1=.5996 pounds)
(Editing by Mike Nesbit, John Stonestreet) ((mark.r.potter@thomsonreuters.com; +44 20 7542-2943; Reuters Messaging: mark.potter.reuters.com@reuters.net))
Source: http://www.reuters.com
UPDATE 3-Carphone ups earnings view, confident on Christmas Added: (27.11.2009)
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