Carphone Warehouse, Europe's largest independent mobile phone retailer, today forecast a 20 per cent rise in profits this year after a 34 per cent jump in annual earnings last year met expectations.
Carphone's headline pretax profit, which rose to £102.1 million from £76.3 million, met consensus forecasts on the back of strong contract and pre-pay handset sales. But earnings per share (EPS) of 9.39p topped average forecasts. Carphone's chief financial officer Roger Taylor said the strong EPS performance had been underpinned by a lower tax rate across continental Europe, adding the company remained on track to lift pretax profits by 20 per cent this year.
Dunstone said intense competition between mobile networks was likely to continue as they try to migrate customers over to 3G services and more launches occur by mobile virtual network operators. These operators own no network but offer own-brand services by buying airtime wholesale from network partners.
Profits in the 53 weeks to April 2 came on the back of a 27 per cent increase in sales to 2.355 billion pounds - and the company said trading in the nine weeks to June 4 showed a stronger-than-expected 20 per cent rise in customer connections.
The company, which operates in 10 countries and has more than 1,460 stores, said it plans to open a further 100 stores in the UK and 150 stores in Europe over the coming year. Carphone, which also offers fixed-line telecoms services, said it now had 920,000 customers on its TalkTalk residential fixed-line telecoms service in the UK, beating the 900,000 target it had set itself to achieve by March. The company has said it expects to have 2 million customers by March 2008.
But Carphone's shares were initially tempered by news that chief executive Charles Dunstone was selling his first tranche of 6 million shares, or 2 per cent, of the company.
Dunstone will hold 298.6 million Carphone shares - around 34 per cent - following the sale. He will net around £10 million.
A spokesman for the company said that Carphone's employee share ownership trust intended to buy all the shares being sold.