Spark New Zealand (SPK) H2 2024 earnings summary

Executive summary

• FY 2024 performance was impacted by recessionary conditions, with adjusted revenue down 1.2% and adjusted EBITDA down 2.5% year-over-year, while growth is targeted in FY25 as the SPK-26 Operate Programme accelerates.

• Mobile service revenues surpassed NZD 1 billion for the first time, growing 3.1%, with IT products, data centers, and high-tech segments also seeing growth.

• Economic conditions led to lower IT services demand, intensified competition in business mobile, and lower device sales.

• Customer satisfaction improved by seven points, employee engagement remained strong, and sustainability benchmarking stayed in the top quartile.

• The board approved a total FY 2024 dividend of 27.5 cents, 100% imputed, with the Dividend Reinvestment Plan reinstated for H2 FY24.

Financial highlights

• Adjusted revenue decreased 1.2% to NZD 3.861 billion year-over-year; reported revenue fell 14.0%.

• Adjusted EBITDA fell 2.5% to NZD 1.163 billion; adjusted NPAT declined 21% to NZD 342 million.

• Free cash flow dropped 32.5% to NZD 330 million, mainly due to lower EBITDA and higher interest, lease, and non-cash costs.

• CapEx was NZD 518 million, flat year-over-year, with over two-thirds invested in network and digital infrastructure.

• Net debt to EBITDA ratio increased to 2.1x, above the A- credit rating guideline of 1.7x.

Outlook and guidance

• FY 2025 guidance: EBITDA NZD 1.165–1.22 billion, CapEx NZD 460–480 million, dividend 27.5 cents per share (75% imputed).

• Targeting 3% mobile revenue growth, 20–25% high-tech revenue growth, 15% data center revenue growth, and stabilization in IT services.

• Cost reduction targets: NZD 50 million net labor and NZD 30 million net OpEx reduction.

• Free cash flow expected to grow to NZD 400–440 million in FY 2025, with a plan to return net debt to EBITDA to 1.7x.