Disappointing results announced Monday by TPG Telecom and online retailer Kogan, although the positive movements of their share prices were a surprise on a generally weak trading day.
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TPG Telecom (ASX: TPG), Australia’s second-largest internet service provider and major telco, struggled in 2022 and saw a 3% fall in net after-tax operational earnings, despite a surge in statutory profits because of a major asset sale during the year.
The company unveiled net profit after tax (NPAT) of $513 million, compared to $113 million in 2021.
The profit was boosted by the sale of TPG’s tower and rooftop assets to Canadian fund OMERS for $950 million last May.
The telco’s net profit, excluding the tower sale and customer amortisation, for the year came in at $222 million, down from $225 million the year before.
TPG said that the Adjusted NPAT for the purpose of dividend calculation was $646 million, an increase of $59 million or 10.1% compared to FY21 ($587 million). That is a non-standard profit measure.
That saw the final of 9 cents per share which with an interim of the same size, makes for a full year payout of 18 cents per share for 2022. That was up 1.5 cents from 2021.
Revenue for the period edged up a less than inflation 2.3% to $5.4 billion, from $5.2 billion in 2021.
TPG reported a net increase in mobile subscribers of 300,000, with average revenue per user (ARPU) for mobile services rising 1.9% (again less than the 7.8% inflation rate in 2022) in the period to $32.4 per month.
TPG said expects its EBITDA to improve from $1.79 billion last year to between $1.85 billion and $1.95 billion this financial year.
“The operational and strategic foundations we have put in place are translating to an improving financial performance, which we expect to gather momentum through 2023,” said TPG chief executive Inaki Berroeta.
In December, the Australian Competition and Consumer Commission barred TPG and Telstra from sharing their regional mobile network, which TPG claimed would have brought improved connectivity to the regions.
An appeal process is underway with the Australian Competition Tribunal and a decision is expected in June 2023.
Despite the weak revenue and earnings performance, investors liked the extra mobile customers and lifted the shares nearly 6% to $5 on Monday.
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Online retailer Kogan (ASX: KGN) reported a $24 million loss for the six months to December on Monday as the boom vanished for website only retailers and the company was forced to get rid of the extra stock it had on hand because it over-invested in products during the lockdowns.
The overstocked position at the company has been well-known for much of the past year, as have its moves to cut the unsold inventories.
Founder CEO Ruslan Kogan said on Monday the company was emerging from a “turbulent few years” after the rush of pandemic-fuelled sales, which were followed by difficulties and excess inventory once online shopping returned to normal levels.
The company had stock worth $137.9 million at June 30, but had cut this figure to $98.3 million by the end of December.
For the half year Kogan reported gross sales and revenue of $471.1 million and $275.6 million respectively, which fell by 32.5% and 34.3%.
“Major impacts on performance included the cycling of COVID-19 related lockdown orders and subdued sales for the Company,” Kogan said.
Gross profit fell 42% to $62.9 million for the half as “profitability during the period was impacted by the substantial right-sizing of inventory involving unprecedented discounting.”
Kogan said its adjusted EBITDA was a loss of $4.4 million and its EBITDA was a bigger loss of $23 million while the adjusted net result was a loss of $9.6 million and the statutory net result was a loss of $23.8 million.
“We have reset Kogan for success, and in doing so, have ensured we continue to delight our millions of customers during these challenging times,” Kogan said in the ASX statement on Monday.
Despite this optimism Kogan’s trading figures for January show evidence that online-only retail business is continuing to slow.
The company reported a 32.2% slump in gross sales to $68.8 million last month, from the start of 2022.
But the shares edged up 2.3% to $3.50 a small positive for a stock that has been on everybody’s suspect list now for the past year with the economy emerging from the Covid lockdowns and getting back to normal.
