Spark annual profit climbs 13% as sales tick up

Spark annual profit climbs 13% as sales tick up, chairman Verbiest signals exit

By Paul McBeth

Aug. 18 (BusinessDesk) - Spark New Zealand boosted annual profit 13 percent as the country's biggest telecommunications company eked out small sales growth and continued its focus on stripping out costs, and signalled a changing of the guard with chairman Mark Verbiest planning to stand down in November.

Net profit climbed to $418 million, or 22.8 cents per share, in the 12 months ended June 30, from $370 million, or 20.2 cents a year earlier, the Auckland-based company said in a statement. Earnings before interest, tax, depreciation and amortisation rose 3 percent to $1.02 billion on a 3.3 percent gain in revenue to $3.61 billion. That was in line with First NZ Capital's forecast for ebitda of $1.01 billion.

Spark has been focusing on fattening its ebtida margins by switching more customers off copper-line services, which attract a fee paid to wholesaler Chorus, and on to its own wireless networks. It wants to achieve an ebitda margin of more than 30 percent by 2020, and achieved 28.1 percent in the latest year.

"The increased ebitda, combined wirh a reduction in depreciation, resulted in overall net earnings increasing a pleasing 13 percent," Verbiest said. "While we're proud of what we've achieved so far, and we've continued to execute our long-term strategy well and deliver good financial results, there are signs that fresh impetus is needed for the next phase of our transformation."

Verbiest signalled his departure from the board in November, when he will hand over the chair to Justine Smyth in what they called "part of a well-considered transition and succession plan".

The board declared a final ordinary dividend of 11 cents per share and a final special dividend of 1.5 cents per share, payable on Oct. 6 with a Sept. 22record date. That takes the annual return to 25 cents per share, unchanged from a year earlier.

Spark plans to keep that annual dividend return at 25 cents in the 2018 financial year, giving guidance for ebitda to rise by as much as 2 percent in the current year, with revenue also seen rising by up to 2 percent.

The shares last traded at $3.92 and have gained 15 percent this year.

ENDS

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