Dutch telecom KPN ups 2022 targets saying it can limit inflation hit

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

The group now targets adjusted earnings before interest, taxes, depreciation and amortisation and after leases (EBITDAAL) of more than 2.40 billion euros ($2.44 billion) this year, with free cash flow of around 850 million euros.

The largest telecom provider in the Netherlands had previously guided for core earnings of around 2.40 billion euros and free cash flow of more than 825 million euros.

“Wage indexation and rising energy costs will affect our cost savings run rate, but with mitigating measures we are confident of our ability to maintain healthy margins and a growing free cash flow,” Chief Executive Officer 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 revenues and cost controls.

Adjusted revenue came in at 1.31 billion euros, up 1.4% compared with the same period last year.

The group also reiterated its 2023 targets.

($1 = 0.9856 euros)

(Reporting by Valentine Baldassari in Gdansk; editing by Milla Nissi)