Carphone Warehouse and European electrical retailer Dixons Retail both posted big jumps in earnings ahead of their planned merger later this year. Carphone reported annual earnings up 59 per cent, while Dixons' profit increased 76 per cent.
Last month Dixons agreed an all-share merger with Carphone, Europe’s largest independent mobile phones retailer, with the two firms seeking to capitalise on an increasing convergence of smartphones and consumer electronics in people’s lives.
However, the May 15th announcement prompted a 10 per cent fall in Dixons’ share price and an 8 per cent slide in Carphone’s. Analysts said they were disappointed with targeted annual cost savings and synergies of at least £80 million by 2017-18, while some expressed concern about a possible top-heavy management structure and what they perceived to be the defensive nature of the deal with both firms facing increasing online competition.
Shares in both firms have rallied since, up 3 per cent over the last month.
The deal, which would create a business with turnover of about £12 billion, 2,900 stores and 45,000 staff, is scheduled to complete in the third quarter of 2014, with the combined group likely to enter Britain’s FTSE 100 index of leading companies.
The firms said the merger was progressing in line with the anticipated timetable. Yesterday the deal received the unconditional approval of the European Commission.
Carphone made headline earnings per share of 18.4 pence for the year to March 29th. That compares to company guidance of 17-20 pence and 11.6 pence made in the 2012-13 year.
Carphone’s main CPW business made pro-forma earnings before interest and tax (EBIT) of £151 million versus guidance of £145-155 million. The group is paying a final dividend of 4 pence, making 6 pence for the year, up 20 per cent.
Dixons, home to the Currys and PC World chains in Britain, Elkjop in Nordic countries and Kotsovolos in Greece, said it made an underlying profit before tax of £166.2 million in the year. That compares to company guidance of about £160 million and £94.5 million made in the 2012-13 year.
Dixons said the new financial year had started well, with an uplift in TV sales driven by the World Cup and early glimmers of a consumer recovery.
(Reuters)
