Telecoms giant BT Group PLC (LON:BT.A) saw its shares rally higher today despite posting a fall in third-quarter profits which were hit by the big write-downs related to the accounting scandal at its Italian business the firm revealed earlier this week.
The FTSE 100-listed firm insisted that its good progress otherwise was being "overshadowed" by the Italian issues.
For the three months third quarter to December 31, BT reported pretax profits of £526min, down from £832mln at the same stage a year earlier, as revenues rose to £6.13bn, up from £4.63bn.
READ: BT warns on Italy issues ...
READ: BT an opportunity ...
For the nine month period to the end of December, BT’s pretax profit was £1.91bin, down from £2.06bin a year earlier.
The results came just a few days after the telecoms giant issued a profit warning and revealed that previously flagged accounting issues at its Italian arm were "far greater" than previously indicated, sending its shares tumbling by over 20% and knocking £8bn off its stock market value.
BT said the adjustments related to the investigation of its Italian business amount to £268mln for prior-year errors, with a specific charge of £245mln for changes in accounting estimates.
Having cut its guidance in relation to the write-down on Tuesday, BT today reiterated that outlook for underlying revenue to be broadly flat for its full year.
US lawsuits ....
There was also little reaction to reports today that BT has been hit by at least two shareholder lawsuits in the US alleging fraud after one-fifth of its market value was wiped out on Tuesday.
A spokesman for BT told Reuters: "These cases are standard procedure in the US. Our position will, of course, be defended robustly."
After this week’s slide, BT shares had rallied modestly by early afternoon trading, adding 1.5%, or 4.55p at 306.55p.
Haitong analyst John Karidis noted that following its “shock profit warning earlier this week”, BT reported third quarter results “slightly ahead of (adjusted) consensus expectations.“
In a note to clients, he said: “Within the mix, at the EBITDA level, Openreach did better than consensus expected; Consumer, EE, ‘Wholesale and Ventures’ and ‘Business and Public Sector’ in line; ‘Global Services’ worse.”
Karidis has placed his stock rating and fair value estimate for BT under review following Tuesday’s warning and ahead of today’s results.
Progress overshadowed ...
BT chief executive Gavin Patterson said: “The good progress we're making across most of the business has unfortunately been overshadowed by the results of our investigation into our Italian operations and our outlook. “
He added: "We face a more challenging outlook in the UK public sector and international corporate markets but we've seen record growth at EE, strong momentum in Consumer, and our highest ever fibre net connections in Openreach.”
The group said it added 83,000 broadband customers in its third quarter, while 260,000 switched to faster fibre connections.
-- Adds US lawsuits report, updates share price --