Vocus Group Ltd (ASX: VOC) just revealed its report for the half year period to 31 December 2017.
Vocus is one of Australia and New Zealand’s largest telecommunications businesses, providing network connectivity.
Here are some of the highlights compared to last year:
- Revenue up 9.2% to $967 million
- Operating earnings, or EBITDA, up 12.6% to $188.1 million (What the heck is EBITDA?)
- Profit down 21%
- ‘Underlying’ profit per share down 27%
- Dividend cancelled
Vocus CEO Geoff Horth said, “Today, we deliver results that demonstrate progress in improving performance for our shareholders. We have recorded strong growth in our Enterprise & Wholesale businesses in both Australia and New Zealand, we continue to take share in NBN and UFB and our transformation program is gaining traction across the business”.
The NBN share that Mr Horth is referring to is that the consumer NBN market share grew to 7.7% from 7.3% last year. The whole consumer division grew revenue by 5.7%, despite ‘challenging market conditions’. Vocus said that the divisional focus on cost control has served to mitigate the profit margin squeeze associated with the migration to NBN, delivering flat earnings.
In the Enterprise & Wholesale division revenue grew by 2.5%, which was helped by Data Networks growing by 14.6%, offset by Voice revenue declining.
Mr Horth also commented on a key infrastructure project, saying, “The Vocus Australia Singapore Cable (ASC) project is on track to be ready-for-service in the first quarter of FY19, and is attracting strong customer interest and has executed several customer capacity agreements.”
Vocus decided not to declare a dividend because of the competing demands and opportunities for capital investment across the business including the ASC project, combined with the focus of the board on reducing the overall debt in the business.
Management kept revenue guidance for FY18 at $1.9 billion to $2 billion. However, it adjusted the underlying EBITDA guidance down to $365 million to $380 million. The underlying profit guidance was also reduced to $125 million to $135 million.
The Vocus Group share price is currently down 10.63% according to Google Finance.
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