KPN misses on falling business revenues, expects strong cash flow
AMSTERDAM, July 29 (Reuters) - Telecommunications company KPN missed analyst forecasts for its second-quarter on Wednesday as efficiency gains and improvements in the consumer segment failed to compensate for declining business revenue.
The company said it expected adjusted full-year earnings before interest, tax depreciation and amortisation (EBITDA) to be in line with last year, and that it anticipated strong cash-flow performance, which would be positive for dividend payments.
Revenues were down 5.1 percent at 1.7 billion euros ($1.88 billion), short of the 1.8 billion expected by analysts polled for Reuters. EBITDA of 568 million also fell slightly short.
The former state telephone company has been cutting costs to offset a decline in income from business customers, while also selling off foreign operations to concentrate on the Netherlands, its last remaining significant market.
A consolidation programme has netted major gains, however, including a doubling in free cash flow compared to last year, driven by lower interest payments, settlement of legal claims, an additional pension payment in the first half of 2014 and different phasing of working capital.
"The strong operational performance combined with strict cost discipline is translating into improving financial results," said Chief Executive Eelco Blok in a statement.
"Supported by lower interest payments, we expect strong free cash flow growth in 2015 which is the basis for our progressive shareholder remuneration policy," he added.
The company is widely regarded as a plausible takeover target for a larger, better capitalised company, it is protected by a preference share foundation which deployed a poison pill to fend of a hostile bid two years ago from Carlos Slim's America Movil.
The Mexican giant still owns a 21.1 percent stake in KPN, which it has indicated it is prepared to sell. ($1 = 0.9049 euros) (Reporting By Thomas Escritt; Editing by Gopakumar Warrier)
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