(Alliance News) - Shares in Dixons Carphone PLC plummeted Thursday after it warned that an increasingly changing UK mobile market will further hurt results in the new 2020 financial year.
The company also slashed its annual dividend after sinking to a loss for 2019 financial year.
Shares in Dixons Carphone were 18% lower at 102.65 pence in London on Thursday.
For the year ended April 27, the phone and electrical goods retailer sank to a GBP259 million pretax loss from a GBP289 million profit the year prior. This was after revenue fell 1.0% to GBP10.43 billion from GBP10.53 billion the year before.
Profit performance was hurt by one-off costs surging to GBP547 million from GBP67 million the year prior, this was primarily after impaired goodwill in relation to its UK mobile phone business amid a market in which handset sales volumes are falling and its market share diminishing.
Headline pretax profit - excluding one-off costs - narrowed to GBP298 million from GBP382 million the year prior.
"In UK mobile, the market is changing in the way we described in December, but doing so faster," Dixons Chief Executive Officer Alex Baldock said.
"So, we're moving faster to respond: we've renegotiated all our legacy network contracts, we're developing our new customer offer, and are accelerating the integration of Mobile and Electricals into one business. This means taking more pain in the coming year, when Mobile will make a significant loss," Baldock said.
"We expect Mobile will at least break even within two years, and beyond that, equipped with a stronger and unconstrained offer, we will of course aim to do better," Baldock continued. "In any case, cash generation from Mobile will be strong."
The company expects its UK mobile division to be significantly loss making in 2020 financial year, with sales and profit growth in the Electricals division across all operating regions.
Adjusted pretax profit for 2020 financial is expected to amount to GBP210 million, with growth thereafter. Capital expenditure is estimated to total GBP275 million with exceptional cash costs of around GBP80 million.
Dixons Carphone proposed a 4.50 pence per share final dividend, down from 7.75p the year prior. Total 2019 financial payout stood at 6.75p, down from 11.25p. The retailer expects total dividend for 2020 financial to be flat year-on-year.
