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Telstra share price: FY19 results reveal lower profits and dividend

Telstra reported significantly lower earnings (EBITDA) and a weaker dividend when it revealed its 2019 full-year results to the market yesterday.

Telstra share price (ASX: TLS) Source: Bloomberg

The open at a glance

The Telstra Corp Ltd. (ASX: TLS) share price fell some 1.78% Thursday after it released its FY19 results to the market.

In this regard, the telco’s shares actually showed impressive resilience: the ASX 200 by comparison fell a significant 2.85%, dropping 187 points.

Telstra share price: fundamentals in focus

Though Telstra’s earnings (EBITDA) came in 21.7% lower in FY19, management was keen to point out that the NBN rollout and the intensely competitive landscape both contributed to such results.

Speaking of the full-year results, Telstra’s CEO and Managing Director, Andrew Penn commented that:

'FY19 has been a pivotal year for Telstra. Notwithstanding the intense competitive environment and the challenging structural dynamics of our industry.'

Mr Penn finished by saying:

‘It is a year in which I believe we can start to see the turning point in the fortunes of the company from the changes we have embraced.'

On the top-line, Telstra reported revenue figures of A$27.8 billion, down 3.6% year-over-year.

On the bottom-line, Telstra Corp Ltd. reported ‘EBITDA and NPAT in line with expectations.’

Specifically, Telstra’s EBITDA came in at A$8.0 billion – down 21.7% – while its NPAT came in at A$2.1 billion.

According to the telco, the main factor driving lower EBITDA figures was the impact of the NBN.

As a positive note for investors, and as we previously reported:

‘In the medium-term, Telstra Corp Ltd expects its T22 vision will create EBITDA benefits of around A$500 million per annum, from a “$3bn strategic investment realised by FY21”.’

Finally, according to the telco strong progress has been made on realising Telstra’s T22 strategy. Here, Mr Penn reiterated during yesterday’s full-year release that:

‘Telstra's T22 strategy is built on the foundation provided by the strategic investment program announced in 2016 to create networks for the future and digitise the business.’

Telstra dividend in focus

Telstra Corp Ltd. reported a lower dividend for the 2019 fiscal year.

On this front, Telstra’s final dividend for 2019 came in at just 8 cents per share – bringing the telco’s total dividend for the year to 16 cents per share.

This represents a decline of some 27% on the dividend from the year prior.

Comments from Telstra’s CEO, Andrew Penn, clarified that:

‘The FY19 ordinary dividend is below the payout ratio of 70 to 90 percent of underlying earnings.’

Telstra (ASX: TLS) is set to pay its 2019 final dividend on September 26, 2019.

FY20 guidance

When providing FY20 guidance, Telstra Corp Ltd. said it expected:

'Total income in the range of $25.7 to $27.7 billion,' and 'underlying EBITDA in the range of $7.3 to $7.8 billion.'

Year-to-date, the Telstra share price has significantly outperformed the ASX 200, rising 39% in that period.

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