Spark NZ posts 78% fall in first-half profit, cuts guidance
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The news: Telecoms company Spark New Zealand has reported a 78% slide in first-half profit to NZD35 million ($31.5 million) and slashed its full-year earnings guidance, after it was hit by spending cuts and mobile fleet reductions across government and businesses during the period.
The numbers: Spark shares tumbled 18.5% to $2.15 in morning trading following the result.
The telco reduced its FY25 earnings guidance from between NZD1.12 billion ($1.01 billion) and NZD1.18 billion, to a range of NZD1.04 billion and NZD1.1 billion.
First-half revenue declined 1.9% year on year to NZD1.9 billion, driven by lower IT services project activity, a shift from private to public cloud, and supplier cost inflation.
The context: Spark said conditions in the New Zealand economy have been "incredibly tough", but highlighted "decisive action behind taken to improve performance".
This includes a "significant transformation" of its operating model and technology and network operations. The company said this is expected to deliver a net labour and operating expenditure reduction of between NZD80 million and NZD100 million in FY25, and NZD100 million to NZD140 million of annualised benefits by FY27.
What they said: "When we updated the market in October, we outlined that we were experiencing one of the longest and deepest recessionary periods in recent history," said Spark chair Justine Smyth.
"Since that time, we have seen no improvement in these conditions, and while there has been movement on monetary policy, this is yet to flow through to any meaningful change in consumer or business spending.
"We know our shareholders will be rightly concerned by the ongoing headwinds we are facing, and board and management are taking decision action to improve performance in the short-term and deliver sustainable competitive advantage in future years."
The source: ASX
