SHARES in Cable & Wireless Worldwide tumbled after the telecoms group warned Government spending cuts would hit full-year earnings growth.
The group said non-contracted public sector spending had “slowed significantly” since the emergency Budget last month and would hit trading as a result.
The group is ramping up cost-cutting plans to help offset the impact, but forecast overall underlying earnings at the lower end of market expectations.
Shares dropped 13% on the news.
C&W Worldwide will delay recruitment and cut the number of non-payroll staff to save cash.
But costs are also expected to be lower due to a reduction in the amount of money spent on bidding for public sector work, while staff bonus pay-outs will be reduced if performance suffers.
C&W Worldwide has a heavy focus on the UK public sector – offering telecoms services to bodies such as the Ministry of Justice, the NHS and the police service.