FIRST CUT: Spark lifts annual profit 12% as cost-cutting drive pays off
By Paul McBeth
Aug. 21 (BusinessDesk) - Spark New Zealand lifted annual profit 12 percent as the country's biggest telecommunications company stripped out costs in its transformation programme, dubbed Quantum.
Net profit rose to $437 million in the 12 months ended June 30 from $337 million a year earlier, with operating revenue unchanged at $3.53 billion. The telco cut operating spending by 4.3 percent to $2.44 billion, which helped boost earnings before interest, tax, depreciation, amortisation and investment income by 11 percent to $1.09 billion, in line with guidance.
Spark expects to eke out more gains in the current financial year, predicting ebitdai of $1.1-$1.12 billion.
"We’ve grown our business in the highly competitive mobile and cloud services categories, held our broadband position, entered new markets like sports streaming, led on cost management and transformed our company culture," chair Justine Smyth said.
"It’s very pleasing to achieve these positive outcomes in a year during which we implemented and embedded massive organisational change with the move to agile ways of working."
Spark's three-year Quantum programme introduced the flatter, more autonomous decision-making structure known as Agile. It also aims to simplify services, boost automation and digitisation to cut costs, use the company's suite of brands more effectively, and up-sell customers to higher-margin services. The end goal is to lift ebitdai margin to at least 31 percent, which it almost reached in the latest year, at 30.9 percent.
The company's board declared a final dividend of 11 cents per share and a 1.5 cent special dividend, taking the annual payment to 25 cents, unchanged from a year earlier. The dividends will be paid on Oct. 4 with a record date of Sept. 20.
The shares closed at $4.01 yesterday, and have fallen 3 percent so far this year, lagging behind a 23 percent gain on the S&P/NZX 50 Index over the same period.