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ASX 200 drops 0.7%, Telstra falls 7.7%

The S&P/ASX 200 Index (ASX: XJO) fell by 0.67% today to 6,091 points.

It was a busy day for reports today. Here are some of the main highlights:

Telstra Corporation Ltd (ASX: TLS)

Telstra’s share price fell 7.7% in reaction to the FY20 result announcement.

The telco announced that its total income fell by 5.9% to $26.2 billion and net profit after tax (NPAT) declined by 14.4% to $1.8 billion.

Telstra said that it had another year of subscriber growth. It added 240,000 retail postpaid handheld mobile services, including 154,000 from Belong. It also added 171,000 retail prepaid handheld unique users, 347,000 whole services and 652,000 internet of things services.

Overall mobile revenue for the ASX 200 share declined $461 million in FY20. Reported postpaid handheld average revenue per user (ARPU) declined 8.2%. The fixed business’ revenue continues to be impacted by the NBN migration.

During the year the company reduced its underlying fixed costs by $615 million. It said it’s on track to achieve its $2.5 billion net cost reduction target in FY22.

In FY20 COVID-19 hurt Telstra’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) by approximately $200 million.

Telstra declared a final dividend of 8 cents per share. The total dividends per share for FY20 was 16 cents, the same as FY19.

For FY21 the ASX 200 telco is expected to be between $23.2 billion to $25.1 billion. Underlying EBITDA is expected to be in the range of $6.5 billion to $7 billion. Free cashflow after operating lease payments is expected to be between $2.8 billion to $3.3 billion.

Treasury Wine Estates Ltd (ASX: TWE)

The biggest rise in the ASX 200 today belonged to Treasury Wine Estate’s share price which grew 12.3%.

Treasury Wine Estates reported that its net sales revenue (NSR) fell 6% to $2.65 billion. This reflected the challenging conditions in the US wine market and the impact of the COVID-19 pandemic which hurt trading in all geographies. However, the NSR per case increased thanks to portfolio premiumisation.

The company’s EBITS dropped 22% to $533.5 million over the year with the EBITS margin dropping to 20.1%, down from 24.1%.

Treasury Wine Estates reported that its net profit after tax (NPAT) fell 25% to $315.8 million and earnings per share (EPS) dropped 26% to 43.9 cents.

The board declared a final dividend of 8 cents per share, bringing the full year payout to 28 cents per share. This equated to 64% of net profit.

Pleasingly, the wine business said there are positive signs of recovery in China. It’s implementing key changes with its US operating model and supply chain which should deliver annualised cost savings of $35 million from FY21 and $50 million by FY23.

Due to the continuing levels of uncertainty across its key markets, the ASX 200 company said it wouldn’t provide earnings guidance.

AMP Limited (ASX: AMP)

The AMP share price rose 10.9% in reaction to the FY20 first half result.

It reported an underlying profit of $149 million, down from $256 million in the prior corresponding period. This drop reflected the impacts of COVID-19. The actual net profit was $203 million.

The diversified financials business said that it had a strong capital position after the sale of AMP Life. It had surplus capital of $1.4 billion at 30 June 2020.

The ASX 200 share is going to return up to $544 million to shareholders. There will be $344 million paid to shareholders with a special dividend of 10 cents per share and there will also be up to $200 million returned to shareholders via an on-market share buy-back during the next 12 months.

However, the AMP board doesn’t expect to declare a final FY20 dividend.

AMP is on track for its target of $300 million of annual run-rate savings by FY22. The client remediation is on track to be 80% complete by the end of FY20 and fully complete in 2021.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Treasury Wine Estates Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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