Spark New Zealand (ASX: SPK) has reaffirmed its FY20 guidance in light of the Covid-19 outbreak. The business confirms full-year EBITDAI (earnings before interest, tax, depreciation, amortization and investment income) of $1.1m – 1.12m. Consensus is currently expecting this number to be in the bottom end of this range, therefore we can see some upside from here. Being a defensive business, there is more earnings visibility even during times like these. Furthermore, it has also declared a full-year dividend of 25c, while the market expects 24c (> 75% franked).
That being said, SPK notes it is not immune from Covid-19 – the impacts have only materialized in the final quarter of FY20 (based on information known today). Depending on how things proceed, there could be more impacts to FY21. As of now, broadband usage has increased significantly, while retail stores remain closed.
CEO Jolie Hodson commented on the position of SPK amongst the chaos of the COVID-19 pandemic,
As an essential services provider, we must ensure we are sustainable over the long-term so we can keep New Zealand connected, help to close the digital divide, and support the transition to new ways of working.
The market reacted favourably to the news with the stock rallying 3.2% at market open, compared to a 2% fall from the ASX 200 (ASX: XJO).
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