Profits leap at Carphone Warehouse

MORE than 6.5m new customers contributed to bumper annual profits at mobile phones retailer Carphone Warehouse last year. The company easily beat City forecasts today with a 34% rise in annual pre-tax profits as consumers rushed to buy the latest hand-held gadgets.

The company said trading across all its divisions was powering ahead in the current financial year, defying a more gloomy picture painted by other High Street retailers recently.

New customer connections in the nine weeks to 4 June were up 20% on the same period last year with similar rates of contract and pre-pay customer growth. City analysts welcomed the results, which were comfortably ahead of projections.

Carphone's chairman Hans Snook said the provision of higher value services beyond just selling phones had clearly paid off. The company has reached the point where 56% of its underlying profits come from recurring income streams. 'This is likely to grow further this year as TalkTalk moves strongly into profit,' he added.

Turnover jumped 27.4% to £2.3bn as 6.5m new customers signed up to mobile and fixed-line telephone services last year, 21.6% above the figure reported a year ago. Carphone Warehouse, which is now Europe's largest independent mobile phone retailer said the outlook for mobile services operations remained 'very promising', according to chief executive Charles Dunstone.

'Our year-to-date connections growth of 20% is particularly encouraging, especially in the context of a weaker consumer environment in the UK,' he added.

The company, which operates in 10 countries and has more than 1,460 stores, said it plans to open a further 100 stores in the UK over the coming year. Carphone said it now had 920,000 customers on its TalkTalk residential fixed-line telecoms service in the UK, edging ahead of the 900,000 target it had set itself to achieve by March.

Set up by Dunstone in 1989 with £6,000 of savings, Carphone is transforming itself from just a phones and connections retailer to a service provider in the UK and elsewhere in Europe.

Investors get a hefty 39% rise in the full-year dividend to 1.8p a share, up from 1.3p a year ago.

Dunstone celebrated today by selling 6m shares for just under £10m, his first such disposal since the company joined the stock market five years ago - 'I wanted a bit of cash,' he explained.

Dunstone has plenty of stock left. He retains 34% of the group's shares, some 299m worth an estimated £496m. He also picks up £5.5m from the dividends on his shares.