Spark reports big drop in profit

Telecommunications company Spark has reported a 72 percent drop in full year net profit, with revenue down 14 percent.

The company's underlying profit was down a third and fell short of its most recent guidance, despite growth in tech products, data centres, with mobile service revenue surpassing $1 billion for the first time.

Key numbers for the year ended June compared with a year ago:

• Net profit $316m vs $1.14b
• Underlying profit $1.16b vs $1.72m
• Revenue $3.86b vs $4.49b
• Underlying profit margin 30.1 percent vs 38.3 percent
• Final dividend 27.5 cents a share vs 27 cps

Spark's financial results for this financial year are cycling significant revenue and net profit gains declared in FY23 following the TowerCo and Spark Sport transactions.

Spark chair Justine Smyth said it had been a challenging year for Spark and for many businesses across country, with economic conditions creating a tough operating environment.

"Public sector spending cuts and deferred private sector investment had a significant impact on IT services revenues, while lower household and business spending impacted mobile devices and accessories sales, and intensified competitive pricing pressure, particularly in business mobile," she said.

"While we are disappointed to not achieve our FY24 ambitions, as we look to the year ahead our business fundamentals are strong, our underlying drivers of growth are enduring, and our continued focus on cost reduction will improve margins and support growth."

Spark chief executive Jolie Hodson said the 2024 result was below expectations, but business fundamentals remained strong.

"As we move through this period, we do so with solid foundations - customer satisfaction is up 7 points, employee engagement remains strong, and we have maintained top quartile sustainability benchmarking against our peers locally and globally," she said.

"We have also continued to make significant investments into the digital infrastructure that underpins New Zealand's economy, supports businesses both big and small to grow, and unlocks new commercialisation opportunities for Spark."

Spark invested more than $350m in network and digital infrastructure, with 28 percent growth in mobile network capacity.

The company is forecasting a full year dividend of 27.5cps and underlying profit between $1.165b and $1.22b, with capital spending in a range of $460m and $480m.