BT posts loss but cost cuts boost shares

BT GROUP posted a 45 per cent drop in first-quarter pre-tax profit yesterday, driven by its loss-making Global Services (GS) division, but said that it had made a good start on meeting its new cost-cutting targets.<br /><br />Shares rose after the group reported pre-tax profit of &pound;272m, on better-than-expected revenues of &pound;5.2m, which were down three per cent on the previous year.<br /><br />BT chief executive Ian Livingston said that it is on track to deliver reductions in operating costs and capital expenditure of well over &pound;1bn, adding&nbsp; that it has achieved &pound;357m in overall savings already.<br /><br />Livingston confirmed that cost saving&nbsp; initiatives at GS were also well underway 2,300 job cuts at the operation over the three month period.<br /><br />Livingston added that the group&rsquo;s other divisions &ndash; BT Wholesale, BT Retail and Openreach &ndash; all continued to perform well, generating earnings growth of six per cent.<br /><br />Analysts welcomed the results as a solid start to the year but noted concern over the group&rsquo;s pension deficit which almost doubled to &pound;5.8bn, from a deficit of &pound;2.9bn.<br /><br />There are also fears that a triennial review of its pension scheme could show a deficit as high as &pound;11bn, forcing BT to contribute more than the &pound;525m-a-year it has pledged for the next three years.