Swedish telecoms group Telia turned in disappointing first-half results yesterday and repeated a warning that its third quarter results would be "somewhat lower than normal".
Telia shares, already a disappointment to the almost one million citizens and voters who bought in at Skr 85 (£7.96) and have seen the price slip to Skr 68. Chief executive JanAke Kark offered little cheer at a news conference on the group's first interim report since the Swedish state sold a 30 per cent stake and Telia was listed on June 13th.
"We said at the time of the bourse listing that the second and third quarters would be somewhat weaker than normal," Mr Kark said in a comment after the results were formally announced.
Mr Kark repeated the profit warning yesterday saying that increased sales volumes were not compensating for the price cuts Telia had been forced to introduce for its telephone services in a competitive market.
First half pre-tax profits after financial items rose to Skr3.79 billion for the six months from Skr2.29 billion a year earlier, but the figure fell short of market expectations of Skr4.21 billion. Sales were up only 2.3 per cent to Skr26.04 billion .
Once-only capital gains and income from associate companies contributed Skr1.96 billion to the group's first half operating profit, compared with a Skr509 million loss under this joint heading in the same period of 1999.
"Telia's figures were worse than I had forecast," Handelsbanken analyst Mr Peter Warleus said.
"The underlying growth in most areas was lower than expected. Telia has run into competition in both fixed and mobile telephony which has pushed margins lower. So the big picture is clearly negative."
Telia has been a costly disappointment to the almost one million Swedes who were persuaded to buy into what was advertised as "the people's share".
Telia was sold to the public and professional investors at Skr85 in June and peaked at Skr94 at its initial listing on June 13th but has drifted lower ever since, mainly on a downturn in the European telecoms sector.
Mr Kark acknowledged that operating profit before depreciation and amortisation fell to Skr6.12 billion from Skr7.25 billion and the operating margin to 23.5 per cent from 28.5 per cent.
