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Dutch telecom KPN ups 2022 targets saying it can limit costs

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FILE PHOTO: KPN logo is seen at its headquarters in Rotterdam
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By Valentine Baldassari and Lynne Schoeman

(Reuters) -Dutch telecom company KPN NV on Wednesday raised full-year core profit and cash flow outlooks, saying it was confident it could limit the impact of soaring inflation after a solid half-year performance.

Adjusted revenue rose 1.4% to 1.31 billion euros with fixed service revenue in the consumer segment falling 2.2%.

Having targeted core earnings of around 2.40 billion euros, it said on Wednesday it could top that figure for this year's adjusted earnings before interest, taxes, depreciation and amortisation and after leases (EBITDAAL).

The largest telecom provider in the Netherlands also raised its free cash flow forecast to around 850 million from more than 825 million while reiterating its 2023 targets.

KPN shares were down 0.9% at 1027 GMT.

"With mitigating measures we are confident of our ability to maintain healthy margins and a growing free cash flow," CEO Joost Farwerck said in a statement.

KPN reported a 1.1% rise in adjusted core earnings to 595 million euros in the second quarter, slightly below analysts' average estimate of 602 million, as higher direct costs partly offset higher service revenue and cost controls.

"It's all about increasing productivity, reducing energy usage, squeezing more energy efficiency from the network, and reducing out-of-pocket spending to battle inflation," Chief Financial Officer Chris Figee said on a call with journalists.

CEO Farwerck added that the group was facing increasing salary costs and that it could become more efficient by digitalising.

($1 = 0.9856 euros)

(Reporting by Valentine Baldassari and Lynné Schoeman in Gdansk; editing by Milla Nissi and Jason Neely)

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