A surprise warning by BT on its profits made its shares lose almost a fifth of their value.

Telecom giant‘s division which provides services to multinational companies did not achieve targets. Although Global Services division continued growing strongly, it’s below expectation cost savings affected earnings.

BT also attributed adverse impact to the decline in UK business of higher margins. The overall impact would result in slight fall in group’s expected earnings of the second quarter.

BT claimed that its other divisions including BT Retail were doing well and results were expected to be in line with targets or ahead.

The group’s chief executive Ian Livingston, who took over in June, stated that BT’s performance was as per expectations in all divisions except BT Global Services. He acknowledged that division’s performance was unsatisfactory and BT was committed to rectify the situation through decisive actions.

He declared that new management at Global Services would accelerate implementation of measures for cost efficiency and improvement of margins.

A range of international companies including news and information group Reuters and consumer products company Unilever receive global communication services from Global Services division.

Division’s revenues increased by 15% year-on-year basis in second quarter with expansion of services to China and India, but BT warned that these earnings of £120m would be significantly below expectations.