Trade Me Group
Due to report today
Forecast
Revenue: $97.9 million, up 14.3%.
Operating profit: $63.9 million, up 5.8%.
Reported profit: $39.2 million, up 0.5%.
Dividend: 8.5cps, up 11.8%.
Trade Me is set to report its first-half result this morning. The focus last year was on its push to increase real estate classified reviews.
Forsyth Barr broker Andrew Rooney said with low expectations for general items, growth must come from classifieds and recent acquisitions.
Focusing on new goods had been a major investment for Trade Me for the last 18 months as used goods growth had fallen.
''Despite this, we expect new goods to remain a minor contribution only, with growth primarily from display enhancements. Overall, we expect limited growth in general item revenues.''
Last year was about Trade Me's attempts to increase its share of spending on real estate advertising. In the end, the company negotiated some price increases - albeit not at the levels it was targeting, Mr Rooney said.
The benefits of the price increases it did lock in were expected to become apparent in the result.
Trade Me had increased not just its development head count but also general support teams. When coupled with its increased promotional activity, that led to both increased operating costs and capitalised development.
The raised level of development costs was expected to continue for at least another 12 months.
Spark
Due to report tomorrow
Forecast
Revenue: $1.76 billion, down 4%.
Operating profit: $464 million, up 3%.
Reported profit: $160 million, down 4%.
Dividend: 9cps, up 13%.
Spark's result tomorrow would highlight its reliance on an improved second half to deliver full-year guidance, Forsyth Barr broker Peter Young said.
Its first-half result would reflect the benchmarked rates for Chorus services, which fell significantly in price only from December 1.
The telecommunications market was put on hold last year as the Commerce Commission reviewed Chorus' pricing.
''Despite this, we expect Spark's fixed-line revenues will have continued to fall. This is a trend we expect to accelerate over the next 18 months with new technology options and changing customer behaviour.''
Spark was expected to have continued to gain momentum in the mobile market, increasing its total subscriber base, he said.
The key was how that converted to increased monthly (recurring) revenue. With Vodafone New Zealand appearing to be distracted with its acquisition of TelstraClear, Spark had continued to improve its market share.
Chorus
Due to report on February 23
Forecast
Revenue: $516 million, down 4%.
Operating profit: $316 million, down 4%.
Reported profit: $64 million, down 17%.
Dividend: none, no change.
The copper revenues for Chorus would continue to fall as increasing numbers of customers moved to fibre-based services, Mr Young said.
The ability of Chorus to retain customers in areas such as Christchurch, where there was ultra-fast fibre, while managing the migration of customers to its own fibre networks was critical for managing its cash flows.
The Government had proposed expanding the ultra-fast broadband programme to cover an additional 5% of the population - up to 80% - as well as extending the Rural Broadband Initiative.
''We expect this additional investment will marginally increase the build of competing networks. We are looking for any updates on this process from Chorus.''
Freightways
Due to report on February 23
Forecast
Sales: $243.6 million, up 12%.
Operating profit: $48.7 million, up 16%.
Reported profit: $26 million, up 19%.
Dividend: 12cps, up 20%.
Freightways was likely to report strong earnings growth, Mr Rooney said.
After a strong first quarter, assisted by an additional trading week and weaker previous-year comparisons, a slower second quarter was expected.
The additional trading week boosted group revenues by about $7 million, or 3%, in the first half. However, strong like-for-like growth in the express package business - driven by industry growth and supported by further market share gains - was still expected.
Revenue growth would probably slow through the rest of the financial year, given more difficult previous-year comparisons and the impact of lower fuel prices. Lower fuel prices would lower revenue but enhance profits, given the timing benefit of Freightways' pass-through approach.
