Spark shares sink on guidance downgrade
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More news: Shares in Spark New Zealand lowered in morning trade after the Auckland-based telco reduced its full-year earnings guidance amid challenging trading conditions.
Spark shares fell 4.7% to $4.05 by 11:50am AEST.
Spark downgrades guidance as trading conditions soften
The news: Spark New Zealand has reduced its full-year earnings guidance, as the telco flagged "challenging trading conditions" have intensified in some parts of the business.
The numbers: Spark said it is reducing its FY24 EBITDAI guidance from the current range of NZD1.215 billion ($1.1 billion) to $1.26 billion, to $1.17 billion to $1.21 billion.
The context: In Spark's first-half results the company noted weaker demand in the enterprise and government market, impacting its IT revenues.
Spark said that public and private sector spending cuts deepened during the second half, with the company seeing "significantly reduced remand" in IT service management and professional services, as well as delays to planned digital transformation projects.
Meanwhile, though mobile service revenue and broadband performance remains in line with expectations, sales of mobile devices and accessories have been softer than expected, as high interest rates and cost of living pressures dampen consumer spending.
Spark said it has maintained strong cost discipline in an inflationary environment, but the "material deterioration in outlook" for IT revenues, combined with subdued market conditions more broadly, has resulted in its reduced EBITDAI outlook.
The company noted it was accelerating a redesign of its operating model to bring efficiency benefits online faster and rebalancing labour investment to changing growth profiles across the business. It said this work would continue alongside broader efficiency initiatives to mitigate the impact of softer trading conditions.
Spark confirmed that there was no change to its FY24 capital expenditure and dividend guidance.
The source: ASX announcement
