KPN Shares Fall as Company Cuts Outlook, Profit Misses Estimates
January 25, 2012, 7:37 AM ESTBy Maaike Noordhuis
Jan. 24 (Bloomberg) -- Royal KPN NV, the largest Dutch phone company, posted a 63 percent drop in fourth-quarter net income and predicted lower 2012 profit and cash flow, causing its shares to fall the most since 2008.
“2012 will be a year of transition in the Netherlands, as we aim to bottom out our broadband market share and to stabilize our market share in Consumer wireless,” Chief Executive Officer Eelco Blok said in a statement, adding KPN’s domestic business wasn’t “meeting expectations.”
KPN fell as much as 9.7 percent, to its lowest level in almost 6 years, and was down 8 percent at 7.86 euros at 9:08 a.m. in Amsterdam trading.
Blok said KPN will accelerate domestic investments in 2012 to ensure “suitable” profits. The company is struggling with changing consumer behavior as consumers increasingly communicate with social media such as Skype and WhatsApp. The CEO last year announced job cuts of 4,000 to 5,000 employees in the Netherlands through 2015.
Fourth-quarter net income fell to 176 million euros ($229 million) from 474 million euros, the company, based in The Hague said today. Sales declined 0.4 percent to 3.4 billion euros. Six analysts in a survey by Bloomberg had predicted profit of 475 million euros.
KPN said 2012 free cash flow will decline to between 1.6 billion euros and 1.8 billion euros, compared with an earlier prediction of approximately 2.4 billion euros. Earnings before interest, taxes, depreciation, amortization and restructuring charges fell 1.6 percent to 1.34 billion euros in the fourth quarter and declined 3.8 percent to 5.27 billion euros in the full year. Analysts has predicted EBITDA of 1.36 billion euros in the quarter. The company sees EBITDA of 4.7 billion euros to 4.9 billion euros this year.
The company said it won’t buy back shares this year after purchasing shares for 1 billion euros in last year. KPN will stick to its dividend policy and plans to increase the dividend in 2012 to 90 cents a share from 85 cents for 2011.
--Editors: Kim McLaughlin, Thomas Mulier.
To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
