There may be trouble ahead: Dixons Carphone shares fall as it prepares for "uncertain times"

 
Oliver Gill
Follow Oliver
BRITAIN-TELECOM-RETAIL-BUSINESS-MERGER-CARPHONE-DRG
Half-year like-for-like revenues were up by four per cent

Shares in Dixons Carphone fell 4.6 per cent in early trading after it said it was steeling itself for "uncertain times" in the months ahead.

The figures

Revenues in the six months to the end of October increased four per cent on a like-for-like basis to £4.9bn, it said in a statement today.

Profit before tax jumped nearly a fifth to £144m, while earnings hit £153m, from £135m in the previous year.

This translated into earnings per share of 10.9p, up from 7.5p, and meant the firm raised its dividend by eight per cent to 3.5p per share.

Cash flow was stable at £65m but the firm's net debt position was markedly lower: down from £378m to £285m.

Why it's interesting

The half-year numbers straddle Britain's EU referendum vote, but chief exec Seb James said any impact from the referendum was minimal. "We have still not seen any effect on consumer demand as a consequence of Brexit," he said.

Nevertheless, Dixons is not resting on its laurels and James pointed to reducing the group's cost base as an important tool in managing the months to come.

"We have been planning for the possibility of more uncertain times ahead. In particular, we have been focusing on reducing our fixed cost base," he said.

Read more: Dixons Carphone has created an Amazon Dash style button prototype

Alongside today's numbers – which from Dixons' perspective all seem to be going in the right direction – is a new joint venture with energy supplier SSE.

Dixons there is money to be made in not just flogging "connected homes" devices, but also servicing and monitoring them. This morning it said under the new partnership, SSE will use its HoneyBee software to enable 5m of its customers to monitor, control and maintain their homes and appliance.

Deputy chief exec Andrew Harrison said juggling our busy lives while checking on devices at home can be a bit of a "minefield".

As Dixons is installing many of the devices in the first place, it makes sense for them to partner up with an energy provider to monitor them.

What the company said

Reflecting more generally on the half-year performance, James said:

Two years ago when we combined the businesses of Dixons Retail and Carphone Warehouse, we set out a strategy to create a powerful engine to help our customers navigate an increasingly complex and interconnected world.

It is therefore, very encouraging again to be able to report good growth in both sales and profits across all of our businesses.

In short

A solid performance for now - but there may be trouble ahead.

Related articles