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KPN hit by sales and profit drop, announces staff reductions

VEE has posted a year on year drop in revenue for the first quarter of 2014

Dutch operator KPN has recorded a ten per cent year on year drop in revenues for FY2013, as well as a 6.7 per cent drop in net profit. The group added that it is looking to create a leaner operating model by making redundancies over the next two years.

Revenue for the operator stood at €8.47bn for FY2013, down from €9.4bn generated a year earlier. Revenue for the final quarter of the year was also down 7.9 per cent year on year, from €2.38bn in 4Q13 to €2.06bn in 4Q12.

Net profit for the year stood at €293m, down 6.7 per cent year on year from the €314m reported in 2012. While the group recorded a net loss in the final quarter of the year, it was less than half the size of the loss reported in 4Q12, standing at €108m compared with the €263m loss recorded in the same period a year earlier.

KPN said that it had now completed a staff reduction programme started in 2011, which has resulted in 4,650 fewer full-time equivalents (FTEs) in the Netherlands. An FTE is a unit of measurement that indicates the workload of an employee – an FTE of 1.0 is equivalent to one full time employee. The group said it has over 30,000 employees worldwide.

But the firm said that its next step to create a leaner business model is to reduce its workforce by a further 1,500 to 2,000 FTEs by 2016. In addition, KPN plans to simplify its product portfolio, client processes, networks and IT systems.

“In 2013, we continued our clear focus on improving operational performance driven by investments in networks, products and customers,” said KPN CEO Eelco Blok. “We have now put in place strong fundamentals at KPN and expect stabilizing financial performance towards the end of the year 2014 and FCF to grow in 2015.”

He added that the firm is confident it will obtain regulatory clearance for the sale of German subsidiary E-Plus to Telefónica Deutschland, which will improve the firm’s financial profile, and it intends to recommence paying a dividend in 2014.

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