* Q2 core profit 633 mln euros vs 626 mln expected
* Says made cost savings of 75 mln euros in first half
* Keeps 2014 outlook, aims to pay small dividend
(Adds CEO comments)
By Robert-Jan Bartunek
BRUSSELS, July 30 Dutch telecoms group KPN
said on Wednesday its second half results would beat
the first half, after strict cost cutting helped second quarter
profits beat expectations.
The group, which in 2013 fended off a takeover bid by top
shareholder America Movil - controlled by billionaire
Carlos Slim, has faced stiff competition in its domestic market
but repeated its results would stabilise by the end of 2014.
"We expect the results in the second half to be better than
those in the first, so in that sense you could speak of a trough
or that we have passed it," chief executive Eelco Blok said on a
KPN's shares rose as much as 4.6 percent, making it the top
performer on the STOXX 600 European Telecoms Index.
In the second quarter, group core profit fell 19 percent to
633 million euros, above the 626 million expected in a Reuters
poll of seven analysts.
KPN said its "simplification programme" resulted in savings
on operating and capital expenses of about 75 million euros
($100 million) in the first half, with 350 employees leaving the
KPN said in February that it would cut up to 2,000 jobs to
stem falling profits.
The cost cutting was most apparent in the group's business
unit, which sells telecom services to companies, where it
managed to slow the year-on-year decline in core profit to 17
percent from a 25 percent decrease in the first quarter.
Its Dutch consumer mobile business - an area of concern for
several of the past quarters - weighed on results, with adjusted
core profit falling 63 percent in the second quarter.
The group said it added 53,000 new mobile customers on a
contract and average spend per user was stabilising, thanks to
customers taking up more than one service and subscribing to
fast mobile broadband (4G).
KPN's fixed line telecoms services continued to perform
well, lifting core profit by 19 percent in the second quarter.
"We believe consensus expectations are realistic as top line
is stabilising we expect a further positive impact from the
simplification programme," ING analyst Emmanuel Carlier, who has
a "buy" recommendation on the stock wrote in a note to clients.
The company's net debt to core profit ratio was 2.2 times,
up from the 2.1 at the end of the first quarter, including the
sale of E-Plus, which was cleared by European regulators earlier
KPN said that, if the sale of its German unit E-Plus closed,
it would restart paying a dividend of 0.07 euros for the 2014
The group said it would invest less than 1.4 billion euros
in 2014 and less than 1.5 billion in 2015.
CEO Blok said KPN's relationship with its largest
shareholder, which had been troubled by the latter's failed
attempt to gain full control, was very good and the two
companies were working together closely on wholesale agreements.
America Movil, which reduced its stake in KPN to 22.6
percent from 25.7 percent in March, is facing tough new rules in
its Mexican home market, forcing it to share infrastructure and
slash access costs for rivals.
Blok said the Mexican group had not elaborated on whether it
would keep a stake in the Dutch group in the long term.
($1 = 0.7460 euros)
(Editing by Philip Blenkinsop and Louise Ireland)