Restructuring costs hit eircom profits

Eircom has reported pre-tax losses of €16m for April, May and June. Today's results are eircom's first set since flotation.

Operating profit before factoring in restructuring programme costs was up 86% to €65m. The restructuring at the company led to a charge of €48m in Q1 to reduce headcount by about 400. The company's balance sheet was further weighted by interest payments on its near €2bn debt.

However, operating margin was 16%, up from 9%.

In its results statement today, eircom said there had been more than €57m capital investment in Q1, and reconfirmed the company's target of €200m for the year.

Turnover was 2% lower than the same period last year at €402m, but the company said this was "slightly ahead of plan".

Revenues from voice telephone traffic fell 11%, but the company said that this was offset by increased revenue from line rental and broadband.

Eircom had 54,000 broadband customers at Q1 and now has 73,000, boosted by a free trial scheme to increase take-up. The company has set a target of 100,000 customers by the end of the year.

Commenting on the results, eircom Chief Executive, Dr Philip Nolan said: "We have announced a very solid set of results for Q1, which are in line with our plans and expectations. In a tough environment, we have grown profitability significantly."