(Adds further details and reaction)

By Kate Holton

LONDON, May 22 (Reuters) - British telecoms company Cable & Wireless Plc (CW.L: Quote, Profile, Research) is considering a demerger of its two divisions this financial year after beating forecasts with a 23 percent rise in annual underlying core earnings.

The group forecast strong earnings for 2008/2009 after seeing its Europe, Asia and U.S. (EAU) business, formerly known as the UK division, return to revenue growth.

The UK's second-biggest corporate telecoms provider after BT Group Plc (BT.L: Quote, Profile, Research) split itself into two separate units in 2006, prompting speculation this would lead to a full demerger.

"We've made good progress in our turnaround and we've talked (before) about considering value realisation," Finance Director Tony Rice said on a conference call with reporters on Thursday.

"There are a number of options. Obviously there is a demerger, rationalisation of the portfolio or leveraging and returning capital to shareholders, and we're looking at all of those. We're talking about doing something in 2008 and 2009."

The news sent shares in the group up 2 percent to 155-1/2 pence by 0925 GMT, with analysts welcoming the outlook and solid results.

They also welcomed the comment C&W was in active discussions over options to further de-risk the pension scheme and that these options, including an insurance buyout, were not a precondition for "value realisation".