Carphone Warehouse sees earnings edging higher

LONDON (Reuters) - Carphone Warehouse (CPW.L), Europe's biggest independent mobile phone retailer, forecast a slight rise in 2013 earnings at its key European unit, after revamped stores and new products helped it meet the low end of its target for 2012.

European retailers are suffering as rising prices, subdued growth in wages, government austerity measures and worries about the eurozone debt crisis hurt consumer spending.

The group said earnings before interest and tax (EBIT) at the European unit were 135 million pounds ($210.4 million) in the year to the end of March, unchanged versus the previous year and at the bottom of the company's 135-150 million pound forecast range, as it had predicted.

Revenue at the division was 5.5 percent lower at 3.3 billion pounds. It forecast headline EBIT of 130-150 million for the full year 2013.

Overall, group profit before tax surged to 762.2 million from 67.2 million the previous year, reflecting the disposal of Best Buy Mobile. The company returned 813 million pounds to shareholders from that deal.

"Looking ahead, we expect the consumer environment in Europe to remain difficult, but we see opportunities as well as challenges and we are confident in our strategic positioning and operational execution," Chief Executive Roger Taylor said in a statement.

However, he struck an upbeat note on sales of key new products like tablets and sought after phones.

Sales of the new Samsung (005930.KS) Galaxy S III have gone well in its first few weeks, Taylor said.

"We're delighted. It's a good rival to any market leading product."

Growth in non-mobile phone sales is also set to continue.

"We've seen about 15 percent growth in what we call non-mobile phone revenues, so that's predominantly tablets, accessories and what we call app-cessories - items that complement applications and bring them to life," Taylor said.

Revenue at the group's Virgin Mobile France unit grew 18.8 percent to 390.2 million pounds. The group said the French unit had shown itself to be "very robust" in the face of increased competition.

"Virgin Mobile was affected like all networks in France by the launch of Iliad's proposition in January. The good news is we've got our base back to where it was before that launch."

The group said it would pay a 3.25 pence final dividend, taking its full-year dividend to 5 pence.

The group is managing costs well, Taylor added: "Our operating expenses line is down 30-40 million year-on-year. Our cost management is pretty good. We're continuing to look at cost opportunities."

Taylor said Carphone Warehouse would launch in China at the end of June, with its partner Best Buy (BBY.N), with about 15 stores due to open in the following weeks.

It is also working with other potential partners in markets around the world, Taylor said, declining to name them, but adding "we're making some good progress."

($1 = 0.6418 British pounds)

(Editing by Paul Hoskins and Elaine Hardcastle)