Dixons Carphone 1H profit plunges, maintains forecast as mobile turnaround on track

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LONDON (Reuters) – British electricals retailer Dixons Carphone (DC.L) stuck to its forecast for annual profit and said a plan to cope with the challenging mobile phone market was working, but it wasn’t counting on any post-election boost.

FILE PHOTO: A sign displays the logo of Dixons Carphone at the company headquarters in London, Britain August 1, 2017. REUTERS/Neil Hall

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It reported a drop in first-half profit of 60 percent, though it maintained its financial guidance for its full 2019-20 year.

UK voters headed to the polls on Thursday in an election that could break the impasse over Britain’s exit from the European Union, but Dixons Carphone chief executive Alex Baldock said that political clarity wouldn’t necessarily help consumer confidence.

“The current uncertainty is certainly having a dampening effect on consumer confidence,” he told reporters. He said any prospect of a post-election uptick would be “an outcome I’d welcome, but we’re not counting on it.”

Baldock, who has been CEO since April 2018, is leading a plan to turnaround Dixons Carphone which has been hurt by a shift in the mobile phone market as customers keep their handsets for longer, choose cheaper SIM-only deals, and turn to more flexible credit-based offers.

The company, which trades as Currys, PC World and Carphone Warehouse in the UK and Ireland, stuck to a forecast for adjusted pretax profit of around 210 million pounds ($269.43 million) for its 2019-2020 financial year, 30% lower than in 2018-19.

In its first half, the 26 weeks to Oct. 26, it made a pretax profit of 24 million pounds, compared with 60 million pounds in the year-earlier period, on mobile UK and Ireland mobile revenue which plunged 18 percent.

The shares rose 6 percent to 139 pence at 1017 GMT, which analysts said reflected the company’s reassurance that it would meet annual forecasts.

“An 18% decline in first-half mobile revenue is hardly what one would call robust, however expectations were low going into the results,” said AJ Bell investment director Russ Mould.

Baldock said the company was in a trough year for losses from its mobile unit, adding it was expected to break-even by 2022.

“We’re on track to deliver what we promised this year, and with our longer-term transformation,” he said.

The mobile business’s improvement will come from the renegotiation all of the group’s legacy contracts with network providers Vodafone (VOD.L), EE (BT.L) and O2 (TEF.MC).

A revamp of the group’s mobile product range, including improved choice in SIM-only deals and flexible credit based bundles, will also boost its performance, plus fully combining the two cost bases of what were two separate businesses, Dixons and Carphone Warehouse, which came together in a 2014 merger.

Reporting by Sarah Young; editing by James Davey and Mike Harrison



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