Jolie Hodson: Spark CEO on the company reporting a significant fall in profit

Spark has reported another big fall in profit, with reported net profit down 17.7 percent to $260 million - or a 33.6 percent fall to $227 million, adjusting for one-offs.

The telco also cut approximately 1300 full-time employees by the end of June, with many roles being eliminated or going to outsourcing and offshoring firms.

CEO Jolie Hodson says it's a tough economic market and the company has had to adjust to these changes.

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Episode Transcript

Speaker 1 (00:00):
Now as investors, we're expecting Spark has had a tough
year when you were just for one offs. Net profit
for the most recent financial year was down more than
thirty three percent to two hundred and twenty seven million dollars.
The companies also cut about thirteen hundred full time employees. Now,
Jolie Hodson is Spark CEO. Hey, Jolie, Hi Heather, So
what happened? So we've been facing into a tough economic environment.

(00:21):
Like many companies, some of the markets that we have
Biggish market sharing have been really impacted both by reductions
had seen in their own businesses. Lower spending has ever
adapted to the economic environment, and so we needed to
adjust and change and that's really been a focus for
us over the last six months in terms of the
program we put in place. Yeah, so lots of corporates
cutting their expenses. And if you think about wheenor and

(00:45):
we work in both it as well as telecommunications, so
you think about tech product projects happening and being deferred
over time. So we had a big impact in relation
to that, particular in our enterprise and government business. Yeah,
is government has government hit you particularly? We have a
strong customer base and government, and so we have seen
some of that spend reduction that's happened in the last

(01:06):
two years, and that's really has been a big impact
for us. Have you had a look at another thing,
because in the past you've been criticized for the dividend spend?
Have you had another think about that? Where reset a
capital management policy? With these results? So really, in a nutshell,
there's a few things that we've changed there. So our
dividend's now based on the free cash flow of the business,
so pretty much it'll be a range of seventy to

(01:28):
one hundred percent. So that's to some extent, living within
your means within that dividend. And today we announced a
dividend of one hundred percent payout of the free cash
flow range. How do you feel? I mean, one of
the bigger things that have happened to you guys in
the last financial year is falling out of the Morgan
Stanley Index. How do you feel about that? Look, I

(01:49):
can't look back to what's happened. All I can focus
is on what we need to do ahead, and that's
why the Transformation program has been a big part of
making sure that we get our operating business in all,
so that did lead to some changes. It's not a
decision to overtake lightly, but ultimately we have to adapt
and then some shifts around the non core parts of
our business, so we've divested elements. The real important part

(02:11):
about that is the ability to recycle that cash back
into the things that we do to our core connectivity,
so mobile and making sure that we're growing that. So
that's been the focus for us. Do you reckon you'd
ever get to get back into it? Like it is
that something the business can realistically achieve. I think from
our perspective, we've got an ambition of growing both our
earnings and our free cash flow, and with that comes

(02:33):
dividend and therefore return for shareholders. So for me, that's
very much the focus of the next Fara. I was
talking to Andrew reading of Fletcher before and he said
that this is the worst economic environment that he can recall.
Like I mean, bearing in mind he works in construction
and they really had it very hard, but it's the
worst that he can recall since probably the late eighties.
What about you, Yeah, I'd say it's the worst. I've

(02:53):
worked on both in Australia and New Zealand. In the
last decade plus that I've been back here, I don't
remember a tougher time. Yeah, which is to say that
it can only get better, can't it. Yeah, Like, if
we look ahead, that would be what we're working on.
But the reality is we've had quite a few ocer cuts.

(03:13):
We've got to see that flow back in confidence, I
think in terms of both to consumers but also businesses
to ensure that they're investing, because the only way we
will come out of this is buy investing for productivity,
making sure we are using new technologies, we are thinking
about different ways of doing it, otherwise becomes a really
challenging Yeah. Yeah, I mean what he said though, and
this I think is kind of confronting. This is Andrew.

(03:35):
What Andrew said is it doesn't get better really until
late twenty six, maybe early twenty seven. What do you think? Look,
I think we were all around when we heard the
what was it survived twenty twenty five, So I think
it's right to be cautious around what happens. And I
think most of us have been adapting our businesses to
make sure that we're set up for whatever comes next

(03:58):
and not overly optimistic around when they made around the corner.
I'm excited about AIAU. Yeah, look, I am. We've been
using in our business for a period of time. I
mean you can all see there's lots of funny ways
in which it can be used. In some ways that
are not great for it to be used, but it
does help enable Yeah, I mean we are we over
hyping it though, I mean there is a huge amount
of buzz about it. Is it too much? Now? Look,

(04:19):
I think about in certain parts of our business, so
helping our teams, for example, our customer service teams, So
it is answering twenty thousand queries to our team members
a month right now. So that is a huge amount
of time that's taken off them of doing things potentially
that is not as exciting for them to be doing.
Or So I think there are ways in which definitely
ways in which you use it. Yes, I do use

(04:40):
to use it for partly in terms of when you're
summarizing things, getting you know, like Google used to be
in the past. Yeah, a lot of ways of bringing
different information together sometimes travel, getting recommendations within that yeah. Yeah. Yeah,
And so one of the things as a business that
we're trying to do is really stand back and make
sure that you're using it on an in tien process.
If we are going to use it, because you can

(05:01):
get thousands of things that you could do with it. Yes,
some of them are fun, some of them interesting, but
is it really going to drive efficiency or change your
customer experience? So really our focus right now is on
how do we make sure we use the scale in
the right places. Yeah, hey, hey, I really appreciate your time.
Thank you, Jolly, and thanks for coming in Jolly Hodson
Spark CEO. For more from Hither Duplessy Allen Drive, listen

(05:22):
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