Jolie Hodson: On Spark reporting a 72% drop in full year net profits

It's a tough result for Spark today... reporting a 72% drop in full year net profit... with revenue down 14%.  

The big drop comes after last year's results were boosted by the sale of spark's cell tower network... but the company has acknowledged it's been a challenging year in tough economic conditions.  

Spark's chief executive Jolie Hodson told Heather du Plessis-Allan it has been a tough year for the company.

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Episode Transcript

Speaker 1 (00:00):
Peter Lewis is going to talk through the EU slashing
those planned tariffs on Chinese evs. Gavin Gray is with
US out of the UK, and we will wrap the
political week that was with Barry sober as per usual,
seven past six. Now it is a tough result today
for Spark. They've reported a seventy two percent drop in
full year net profit, with revenue down fourteen percent. The
big drop comes after last year's results were boosted by

(00:21):
the sale of those cell towers, but the company has
acknowledged it's been a challenging year in tough economic conditions.
Jolie Hodson is Spark's chief executive. Hey, jolly hi head,
I right in thinking this looks worse than it actually
is because last year was boosted by the sales of
the towers.

Speaker 2 (00:36):
Yeah, that's right.

Speaker 3 (00:37):
The sale of the towers means that you have a
much higher prey or adjusted revenue on earnings. But really
we strip it out and look at like flight performance.
We did that in twenty three and we do that
here to look at how we've gone. But it has
been a tough year for Spark. Regardless, we did see
some growth in key markets like mobile, clouded data centers.
But equally we saw pressure and IT services as we

(00:58):
saw the impact of economic demand.

Speaker 1 (01:00):
Yeah, what's going on here? Is it a cut back
in government spending or is it a cut back in
consumer spending?

Speaker 3 (01:07):
So the IT services more around both public and private
sector spending, and you've obviously seen change going on in
those organizations as well, which is meant that some of
the projects and things are deferred. This is a combination
that's due to economy and then some of it's due
to the timing and when these things have been happening,
but nevertheless led to lower demand.

Speaker 1 (01:25):
How much of a proportion of your business the affected
business is government spending.

Speaker 3 (01:31):
We've got a significant part of our business enterprises government
spending within that because we offer ranger services right through
from mobile through to cloud DC. So we are affected
when you see changes, I guess in the market like this.

Speaker 1 (01:45):
Yeah, so what do you do, Jolie. I mean, do
you guys accept this is the new normal under a
center right government or are you expecting it to pick
up again?

Speaker 3 (01:53):
Look, I think, like all organizations, they're responding to changes
in the economy and what they need to do, and
I'd expect that we'd start to see potentially in the
second half of twenty five a per carp and demand
because I think the tools that help support and enable
productivity heads so technology are still going to.

Speaker 2 (02:10):
Be important in the future. It's more about getting through
this change process.

Speaker 1 (02:14):
So do you reckon we have to wait basically a
full year before we really start pumping again.

Speaker 2 (02:20):
Look, I'm I'm experienced as anyone. I guess se what
the market might be.

Speaker 3 (02:25):
But I think if we think about our first six
months of our financial year, which is really to Christmas,
I think it's still going to be a pretty challenging
environment and then after that we hope to see a
bit of improvement.

Speaker 1 (02:35):
Then, so you're expecting actually some improvement after new year.

Speaker 2 (02:39):
Yeah, look, that's what that's what we're looking for.

Speaker 3 (02:42):
I guess we started to see some most of the
r cuts, and I think when you start see interest
rates falling in both the hands of consumers but also
in terms of businesses, it starts to make an impact.

Speaker 1 (02:50):
Jolie, It's making me feel excited. The ocr cat's just
as a punter out there spending money on things like
a mortgage and whatever else. I feel like, are you
as a business leader feeling excited about it.

Speaker 3 (03:01):
Look from my perspective, I think it's important that we
start to it's important that we see investment in New Zealand,
and so one of the things that we're really trying
to do is make sure that we're doing that. In
data sens is another growth opportunities and I think better
economic environment hopefully leads to seeing more of that investment there.

Speaker 1 (03:17):
Yeah. Hey, so in the meantime, are you guys going
to have to cut down on your workforce?

Speaker 3 (03:22):
Part of our changes is we looked at the shifts
we've seen in particular the enterprise and government aias meant
that we need to work out what's cyclical so affected
by the economy, and what actually structure needs to change.
So some of that is about getting a more sustainable
cost base for us. So it is making some changes
which we never take lightly for our people. It's not easy,
but we need to make sure that we can adjust

(03:42):
to both market demand and the things that customers are
looking for.

Speaker 1 (03:46):
What numbers are you thinking?

Speaker 3 (03:48):
Well, we included in our results release that there's about
a fifty million reduction in labor over the next twelve months,
but some of that change has already occurred in the
year that's been and so you see the flow through of.

Speaker 2 (03:59):
That into if I twenty five. Yeah, and we have
some changes under at the moment.

Speaker 1 (04:04):
So do you have any idea how many you still
have the cut how many people.

Speaker 3 (04:07):
Look in terms of having translated that into heads. We've
had As I said, we've had some movements in twenty
four already, and there is work underway at the moment.

Speaker 1 (04:15):
Did you see TV and Z is going into territory
that you've already trod, which is the old sports rights?

Speaker 3 (04:22):
Yes, I think I did see something on that.

Speaker 1 (04:24):
And what did you think, Jolie, did you think, mate,
don't do that?

Speaker 3 (04:29):
I think they're in TV and entertainment and sports part
of that, and so if that works for them, that's great.

Speaker 1 (04:34):
Do you think it's going to work better for them
than it does for you, because I mean, this is
not any disrespect to the way that you guys did it,
but they have a platform we're already using, whereas what
you required from us was to get this whole new platform.
I mean, does that make a difference.

Speaker 3 (04:48):
Yeah, Like I think if you've got on a customer
base that's already using those platforms are used to seeing
different forms of both entertainment, and they already have sport
obviously some sport today, then that's going to be an.

Speaker 2 (05:00):
Opportunity within it. But I'm in case they're going to
need to make those commercial decisions themselves about what that
looks like.

Speaker 1 (05:05):
Heart Jolly listen, Thank you very much, appreciate it. Jolly Hodson,
chief executive of Spark. For more from Hither Duplessy Allen Drive,
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