KT Corporation (($KT)) has held its Q4 earnings call. Read on for the main highlights of the call.
KT Corporation’s recent earnings call painted a mixed picture, reflecting both significant achievements and notable challenges. While the company celebrated record-breaking revenue and promising strategic partnerships, it also faced substantial declines in operating and net profit due to workforce restructuring, casting a shadow over its overall performance.
Record-Breaking Revenue
KT Corporation reported a consolidated revenue of KRW 26,431.2 billion, marking a historical achievement since its public listing in 1998. This milestone underscores the company’s robust market presence and its ability to generate significant income even amidst challenging economic conditions.
Strategic Partnership with Microsoft
KT’s collaboration with Microsoft is a strategic move aimed at transforming the company into an AICT entity. This partnership is set to improve structural profitability, highlighting KT’s commitment to innovation and long-term growth.
Strong Performance in Cloud and Data Center
The KT Cloud segment demonstrated impressive growth with a 15.5% year-over-year increase. This growth was bolstered by rising demand for data centers from global clients, showcasing KT’s expanding influence in the tech sector.
Increase in AI/IT Business Revenue
KT’s AI/IT business revenue grew by 11.9% year-on-year, driven by the expansion of AICC and a notable project in Thailand. This growth indicates KT’s strategic focus on AI and IT solutions, which are critical for future competitiveness.
Dividend Increase
KT rewarded its shareholders with an increase in annual DPS from KRW 1,961 in 2023 to KRW 2,001 in FY ’24, reflecting its commitment to shareholder returns and financial stability.
Debt-to-Equity Ratio Improvement
The company’s financial health improved as its net debt-to-equity ratio decreased by 1.9 percentage points year-over-year to 37.7%, indicating effective financial management amidst challenging conditions.
Wireless Revenue Growth
Wireless revenue saw a modest increase of 1.3% year-on-year, with the 5G subscriber base surpassing 10.4 million, highlighting KT’s continued expansion in the telecommunications sector.
Significant Decline in Operating Profit
KT faced a sharp decline in operating profit, which fell 50.9% year-on-year to KRW 809.5 billion, primarily due to one-off labor costs from workforce restructuring. This drop signals challenges in maintaining profitability amidst internal changes.
Decrease in Net Profit
Net profit also saw a significant decrease of 54.5% year-on-year, amounting to KRW 450.1 billion, reflecting the financial strain of restructuring efforts.
Decline in EBITDA
EBITDA fell by 14.2% year-on-year to KRW 4,687.2 billion, further indicating the impact of increased operating expenses and restructuring costs on KT’s overall financial performance.
Increase in Operating Expenses
Operating expenses rose by 3.6% year-on-year to KRW 25,621.7 billion, largely due to workforce revamping, emphasizing the cost pressures faced by the company.
BC Card and KT Skylife Revenue Decline
Both BC Card and KT Skylife experienced revenue declines, with BC Card down 5.4% and KT Skylife down 1.5% year-on-year, reflecting challenges in these segments amidst broader market dynamics.
Content Subsidiary Revenue Fall
The content subsidiary’s revenue decreased by 13.6% year-on-year, highlighting the competitive pressures and evolving consumer preferences in the digital content market.
Forward-Looking Guidance
KT Corporation provided forward-looking guidance with a target to exceed KRW 28 trillion in consolidated revenue for the upcoming fiscal year. Despite recent profit declines, the company plans to enhance shareholder value through quarterly dividends and a strategic share buyback and cancellation plan amounting to KRW 1 trillion until 2028. This forward-looking optimism suggests KT’s confidence in overcoming current hurdles and achieving sustainable growth.
In conclusion, KT Corporation’s latest earnings call reflects a company at a crossroads, balancing record revenue achievements and strategic partnerships with significant profit challenges. The mixed sentiment from the call underscores the need for careful navigation of restructuring impacts while capitalizing on growth opportunities in the AI and cloud sectors. As KT moves forward, its focus on innovation and shareholder value will be pivotal in shaping its financial trajectory.
