Sky TV shares up as profit doubles

Sky TV shares have jumped 20 per cent in early trading on the New Zealand stock exchange after it roughly doubled its profit guidance for the year to the end of June.

The company said it now expected to post a net profit of between $40 million and $48m – a big increase on its earlier forecast of a $17.5m to $27.5m profit – thanks mainly to higher cost savings.

Sky appeared to hint it could make an announcement about the resumption of dividends when it reported its interim results in February.

Chief executive Sophie Moloney said it had appointed external advisers to assist in determining the most appropriate capital management strategy for the company, ‘‘including the future dividend policy’’.

Sky also indicated it was close to announcing the sale of its sprawling Mt Wellington headquarters site.

Sky said it found additional cost savings of $35m, comprised of $26m of recurring cost reductions and $9m in one-off savings for the 2022 financial year. That would take its annualised recurring cost savings to between $40m to $45m per year, it said.

It also expected further savings in future years through ‘‘longer-term transformation initiatives,’’ Sky said in its NZX release. ‘‘More details will be provided when the savings are fully quantified.’’

Sky shares jumped 20 per cent to $2.10 shortly after the announcement, valuing the company at $363 million.

Moloney said Sky had conducted a review of every cost throughout the business, with the aim of delivering savings beyond what had been previously advised to the market.

‘‘I am very pleased to report that the team has identified significant savings as a result of this process,’’ she said.

The company was focused on growing revenue and reducing operating costs, particularly considering a ‘‘step-up in rights costs’’ to secure sports and entertainment content, she said.

Cost savings identified in the 2022 financial year were focused on areas of third party spending, including vendors and contractors, its programming rights, how it produced and marketed content, and its expense profile, she said.

Sky said the sale of Sky’s Mt Wellington properties was progressing well, but as negotiations were ongoing, the potential impact had not been included in yesterday’s guidance update.

Moloney said the business was at ‘‘a positive inflection point’’ with revenue forecast to grow after a number of years of decline.