LARGE CONTRACTS and a successful cost cutting programme helped the Irish business of telecoms group BT increase profits in the year to the end of March 2011.

Although BT Ireland’s revenues narrowed 3 per cent to just below £750 million (€458 million), ebitda (earnings before interest, tax, depreciation and amortisation) increased 11 per cent year-on-year.

“BT has had a strong year in the Irish market, improving profitability and cash flow, while managing the pressure on our revenues,” said Graham Sutherland, chief executive of BT in Ireland. “We continue to transform our cost base, a process we began over four years ago, which is freeing up investment for us to inject into our Irish operations and the services we provide here.”

BT Ireland has focused its strategy on the business, government and wholesale sectors, and has continued to invest in new areas of growth. Capital expenditure on network and IT infrastructure rose 26 per cent year-on-year. Excluding capital expenditure, gross managed costs were reduced by 11 per cent.

The business operates across Northern Ireland and the Republic, and is headquartered in Belfast and Dublin, employing close to 3,000 people.

The overall BT group has set itself tougher than expected targets for the next two years after posting strong full-year results and resolving a lingering concern with its pension scheme.

BT posted fourth-quarter core earnings up 3 per cent at £1.55 billion despite total revenues being down 6 per cent at £5 billion, due to better than expected cost cuts.

The group, which has seen its share price grow over 160 per cent in the last two years, said it expects to return to underlying revenue growth by 2013 after a period of grinding out profit growth by cost cuts alone.

Those cuts combined with an improving sales outlook and investments in the business mean it now expects core earnings to be above £6 billion by 2012/2013, compared with a forecast of £5.9 billion from Reuters I/B/E/S data.

– (Additional reporting: Reuters)