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Telecom NZ profit, revenue slips
WELLINGTON, New Zealand (CNN) -- Telecom New Zealand, the country's biggest listed company, saw a 3.5 percent fall in net profit to NZ$301 million ($164 million) for the half year to the end of December 2002. On an adjusted basis, Telecom NZ said Tuesday that earnings rose 4.2 percent on the corresponding half year in 2001 to NZ$289 million. Total group revenue slipped to NZ$2.605 billion in the 2002 half-year, down from NZ$2.845 billion. Telecom NZ chief financial officer Marco Bogoievski termed it a "strong underlying result". Bogoievski told CNN on Tuesday morning that the company's performance was marked by good cost control, improved cash flow and better debt repayment. Tuesday's first-half result was better than expected. Telecom NZ had shocked the market in November with an earnings warning for its first quarter that saw the shares tumble 9 percent at the time. (Full story) The adjusted result reflects gains associated with the prepayment of cross-border leases, the sale of international network capacity and lower amortization charges following the writedown of Telecom's investment in its Australian AAPT operations. The results and Telecom's forecast it would meet expectations for the full year drove a modest rally in the company's struggling share price from near 15-month lows. Shares close higherShares in Telecom, which accounts for more than 20 percent of the NZSE Top 40, closed 1.57 percent higher at NZ$4.54 in Tuesday trade. The Top 40 index finished 0.7 percent higher at 1,985.65. Telecom Chief Executive Theresa Gattung said the company was seeing good cashflow, particularly in Australia, where AAPT showed a positive cashflow for the first time since Telecom bought it for NZ$2.2 billion in 2000. She said Telecom remained comfortable with market estimations for a full year profit in a range of NZ$670-NZ$710 million. Since peaking at NZ$9.81 a share in May 2000, Telecom shares have shed 55 percent of their value. "The (core earnings number) was probably a touch higher than we were looking for and that may be partly due to a better-than-expected business result from Australia," JB Were broker Peter Stokes told Reuters. "The market wants to see some good encouraging trends from there." Double handicaps"Telecom is performing very well given the double handicaps of a tough telco sector and a regulatory environment that is imposing growing burdens on the company," Telecom Chairman Roderick Deane said in a statement accompanying the release of the results. The company declared a dividend of five cents a share, and said its focus would remain on reducing debt for 18-24 months to maintain its credit rating. Net debt fell by NZ$282 million to NZ$5.02 billion in the six month period. Telecom's domestic wireline business, which accounts for more than 80 percent of core earnings, improved margins by cutting operating expenses 6.7 percent. Reuters contributed to this report.
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