Source Carphone Warehouse Group plc
Interim Management Statement for the quarter ended 31 December 2012
Strong UK LFL. Reiterating full year guidance
- CPW Europe Q3 like-for-like revenue up 7.8%, driven by strong momentum on postpay and tablets
- UK like-for-like revenue up 16% in Q3
- Overall Q3 group connections up 3.9%
- Virgin Mobile France revenue growth of 9.9% at constant currency despite a postpay customer base decline of 17,000 during the quarter
- Reiterating EPS guidance for the full year (11.5p – 13.0p), with a narrowed Headline EBIT range of £135m – £145m for CPW Europe (previously £130m – £150m)
CPW Europe (50% joint venture)
It was the UK postpay segment that really drove the positive like-for-like revenues in Q3, with some extremely compelling offers ahead of Christmas as well as the on-going ‘Smart Deals’. There was some improvement in the overall UK prepay market in the quarter, but it remains weak with this market down by an estimated 15%. Carphone Warehouse, however, outperformed the UK market in this category, gaining market share whilst driving some prepay buyers into the low-end postpay category. Smartphone penetration has improved in prepay with a wider range of low-end smartphones now available.
During the quarter we also made significant progress in establishing Carphone Warehouse as a destination for tablets. Our keen pricing and attractive bundles enabled the business to grow market share significantly, with non-cellular representing c.9% of retail revenue in Q3.
In Europe, whilst overall connections were down, like-for-like revenue was broadly flat in Q3 and we saw a good performance from some of our largest European markets. France, however, remained particularly tough with SIM only deals characterising much of the market. We see this trend in France continuing for the foreseeable future.
As a result, total like-for-like revenue was up 7.8% and total connections were up 3.9% for the quarter year-on-year.
Overall revenues for the quarter also benefitted from strong growth in dealer revenues, and increased by 14.5% from £951m in 2011-12 to £1,089m.
Virgin Mobile France (46% joint venture)
In a tough French marketplace, Virgin Mobile France deliveredyear-on-year revenue growth of 9.9% from €109m to €120m boosted by inbound termination revenue, benefitting from a stronger postpay mix and progressively moving its customer base onto the Full MVNO platform, which continues well.
Virgin Mobile France has continued to reduce its focus on the low-end prepay segment and as such postpay customers now represent 78% of its customer base. Intense competition ahead of Christmas caused a reduction in the postpay customer base of 17,000 in the quarter due to Virgin Mobile France not aggressively chasing high volumes of low-end SIM only postpay customers. As at 31 December 2012 the customer base was 1,801,000 with around 600,000 customers now on the Full MVNO platform.
The overall economic and mobile industry backdrop has not altered, but we remain well-placed to benefit from an exciting range of smartphones and tablets. The reorganisation of our business has enabled improved focus and operational execution, helping to achieve market share gains with strong like-for-like and top-line performance. We are still sub-scale in parts of Continental Europe and as such these markets will remain comparatively challenging. Whilst the UK has enjoyed good like-for-like growth, these improvements have largely been driven through investment in the proposition. Therefore, we are reiterating our guidance for Group Headline EPS.
There will be a conference call for investors and analysts at 9.00 am this morning. The call will also be broadcast on our website, www.cpwplc.com.
The Group will publish its Q4 trading update on 30 April 2013.
For further information
For analyst and institutional enquiries
Kate Ferry, IR Director 07748 933 206
Kerry Becker, IR Manager 07748 910 861
For media enquiries
Shane Conway, Head of PR, CPW Europe 07932 199 659
Anthony Carlisle (Citigate Dewe Rogerson) 07973 611 888