BT – What its annual results mean for investors and why it is still a ‘buy’

7th May 2015


As BT reports its full year results, Ian Forrest, investment research analyst at The Share Centre, explains what they mean for investors…

BT’s fourth quarter and final results reported today were solidly in line with market expectations and investors will be pleased to hear upbeat comments on prospects for the current year with sales and profits both forecast to rise.

Better still was the news that the well-covered dividend has been raised by 14%, reflecting the group’s strong performance.

Furthermore, investors should note that the group expects the dividend to increase by a similar amount this year.

CEO Gavin Patterson said it had been a ground-breaking year for the group with pre-tax profit growing strongly, up 12% to £3.17bn. Although overall revenue was down 2% to £17.9bn, BT has made some major investments to underpin the future growth of the business.

As expected the star of the show was the consumer division which registered 266,000 new fibre broadband connections in the fourth quarter, it’s best ever performance. Furthermore, the company signed up more customers to its BT Sport TV channels. The other divisions experienced tougher trading conditions, especially those exposed to the public sector in the UK.

However, the international division is seeing good growth in Asia and the Middle East.

With continuing growth in its broadband and TV channels, allied to the potential for its £12.5bn takeover of mobile phone group EE and its strong cash flows funding dividend rises well above inflation, the shares have clear attractions. As a result, we recommend BT as a ‘buy’ for medium risk investors seeking a mixture of growth and income.


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