New Zealand's Spark profit down, dividend up

Spark, one of New Zealand's largest listed companies, declared a 19 percent drop in its annual profit on Friday, but said it had turned a corner and an improving cash flow meant an increased dividend for shareholders.

The announcement brought an immediate 6.16 percent jump in the share price to NZ$2.93.

The former Telecom Corp said net profit fell to NZ$375 million (US$248) in the year to June 30, down from NZ$460 in the previous 12 months when the figures included the sale of its Australian business AAPT.

Earnings before interest, income tax expense, depreciation and amortisation (EBITDA) from continuing operations were up 2.8 percent for the full year while revenue was down 2.9 percent at NZ$3.53 billion.

Spark chairman Mark Verbiest said the results confirmed the company turnaround was on track.

"Particularly pleasing is the significant underlying improvement in free cash flow which emerged in the second half of the year, demonstrating that the repositioning of the business is leading to better financial outcomes," he said.

The improvement had given the board confidence to increase the dividend to 20 cents per share, up from 17 cents the previous year.

"The financial results support the board?s view that a return to long-term, sustainable growth in free cash flow, revenue and earnings over the coming years is both realistic and achievable," Verbiest said.

The company anticipates a dividend of 22 cents per share next year with a special dividend of three cents per share as a means of returning excess capital.

"We have now stabilised and reset the business to reflect the fast-changing and increasingly digital world in which Spark New Zealand and our customers live," managing director Simon Moutter said.