BT’s results boost shares

BT’s share price went up by more than 10% today after the company released better than expected results for Q1 2009.

However, the company’s results also show the affect the ongoing recession has had on its pension fund, which is the largest private sector scheme in the UK.

By the end of June, the £30.4 billion pension scheme’s accounting deficit was £5.8 billion net of tax, up from £2.9 billion at the end of the previous month.

BT is thought to be carrying out its triennial pension funding review, which could show an even greater deficit of as much as £11 billion.

The company, which is due to cut a further 15,000 jobs this year, has agreed with the pensions regulator that it will pump an extra £525 million into the fund every year for the next three years.

BT’s pre-tax profits were down by 45% in the three months to the end of June, but taking into consideration the cost of cutting staff and stripping out pensions, profits before financial charges were down just 3% at £1.37 billion.

Revenues were up by 1% at £5.24 billion, which was also better than expected.

Ian Livingston, BT’s chief executive, said: “We have made a solid start to the year against a background of challenging trading conditions.”

He also said the company is on track to deliver reductions in operating costs and capital expenditure of more than £1 billion as well as generating group free cash flow of over £1 billion this year.