25 May 2018

Spark downgrades profit outlook

1:55 pm on 25 May 2018

Spark has downgraded its profit outlook as it plans to spend more on a restructuring programme, adding $55 million of costs to the bottom line.

Spark New Zealand

Photo: RNZ / Kim Baker Wilson

The telecommunications company said its full-year underlying profit would be between $971m and $991m in the June year, compared with a previous forecast of $996m to $1.02bn.

However, it said it expected earnings to strengthen in the 2019/20 financial year.

The company had expected the programme to cost $25m this year, although Spark managing director Simon Moutter had earlier signalled he was looking to accelerate the cost-cutting programme.

The additional expense includes relocation, property lease costs and other restructuring expenses.

Mr Moutter said the changes were expected to save $90m in labour costs in the 18 months to December 2019, while improving customer service and strengthening earnings with an overall lower cost structure.

Mr Moutter said the next year's guidance would be updated when the company reported its full-year result in August, and would include many more factors than just the reduction in labour costs.