Shares in Carphone Warehouse rose after the UK’s biggest mobile phone retailer raised its earnings guidance and committed to pay a final dividend.
Carphone more than trebled interim pre-tax profits, partially due to the popularity of expensive smartphones such as Apple’s iPhone 4.
However, Best Buy UK’s push into Britain is proving costly for Carphone, which owns 50 per cent of Best Buy Europe in a joint venture with the US electronics retailer.
Losses at Best Buy UK widened from £7m last year to £29m due to set-up costs for new infrastructure and a bigger marketing budget. In April the group began opening “big box” mega-stores, with its sixth such outlet opening in Derby on Friday, as well as launching a website for online sales.
Carphone said it expected a bigger loss at the Best Buy UK division for the full year of £50m-£55m.
Carphone also owns a 47.5 per cent stake in Virgin Mobile France, and has a profit-sharing deal with Best Buy Mobile, which runs stores in the US.
In spite of the losses at Best Buy UK, Roger Taylor, chief executive, said the popularity of smartphones and the group’s US growth had prompted Carphone to raise its full-year guidance.
“In the US, Best Buy Mobile is performing better than we had expected with Best Buy Mobile’s US market share now about 5 per cent, compared with about 1 per cent when the venture started in 2006,” he said.
“Reflecting our confidence in the future and our strong cash position, we wish to introduce a progressive dividend policy, commencing with a final dividend for the current financial year.”
For the six months to September 30, Carphone Warehouse Group reported pre-tax profits of £23.7m, up from £6.8m in the same period last year. Earnings per share jumped from 1.5p to 5.5p.
Revenues at Best Buy Europe were steady at £1.67bn, as were gross margins at 29 per cent. Pre-tax profit rose 31 per cent to £38m, of which Carphone’s share was £19m.
At Virgin Mobile France, turnover rose by 79 per cent to £158m, with revenues boosted by Tele2, which was acquired in December 2009. Virgin Mobile France earnings before interest and tax swung from a loss of £19m to a profit of £20m.
Shares in Carphone have more than doubled in value since the demerger of telecoms business TalkTalk in March, and rose 31p, or 10 per cent, to 339p on Friday.
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