BUDAPEST, May 8 (Reuters) - Magyar Telekom said on Thursday its first-quarter net profit more than doubled from a year ago, exceeding analyst expectations and driven by improved gross margins across its key businesses that helped offset a decline in revenues.
Net profit for the first three months came in at 4.83 billion forints ($22.04 million), up from 1.69 billion forints in the same period a year earlier and above analyst forecasts for 3 billion forints in a recent poll by financial news website portfolio.hu.
Cuts in operating costs and lower financial expenses also boosted bottom-line performance as the Deutsche Telekom unit booked significantly lower foreign currency losses in the first quarter than a year ago, it said.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 3.8 percent to 40.53 billion forints, also above market expectations, even as quarterly revenues fell 3 percent, missing analyst forecasts.
“The decline is the result of lower fixed and mobile voice revenues coupled with lower revenues from systems integration/information technology and energy services,” the company said.
“The latter was driven by a combination of the 11 percent cut in regulated retail prices as of November 2013 and the very mild winter season.”
For 2014, the company, which has a market capitalisation of $1.54 billion, flagged a decline in revenue by up to 3 percent and said EBITDA could fall by 3-6 percent.
Magyar Telekom added that it experienced some headwinds in its foreign markets in Macedonia and Montenegro. Fierce competition and regulatory issues would pressure margins in those countries, it said.
The company’s shares have gained 7.5 percent over the past three months according to Thomson Reuters data, outperforming the blue chip index, which dropped 0.7 percent over the same period.
Two of 13 analysts tracked by Thomson Reuters rate the stock a ‘buy’, five rate it a ‘hold’, while six have assigned various levels of ‘sell’ recommendations.
$1 = 219.1 Hungarian forints Reporting by Gergely Szakacs; Editing by Matt Driskill