Chorus (ASX:CNU) share price jumps 10% today amid guidance upgrade and NZ$150m buyback

Chorus shares were on form on Monday…

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Key points

  • Chorus has announced strong profit growth during the first half
  • This positive performance has led to the company upgrading its earnings and dividend guidance
  • Chorus has also announced a NZ$150 million share buyback

The Chorus Ltd (ASX: CNU) share price was a strong performer on Monday.

In response to its half year results, the New Zealand-based telco's shares jumped 10% to $6.86.

Chorus share price jumps on solid half year update

  • Operating revenue up 1% to NZ$483 million
  • EBITDA up 5.8% to NZ$347 million
  • Net profit after tax jumped 56% to NZ$42 million
  • Interim dividend of 14 NZ cents per share
  • NZ$150 million share buyback

What happened during the half?

For the six months ended 31 December, Chorus reported a modest 1% increase in revenue to NZ$483 million. Management advised that this was primarily due to gains from its ongoing network optimisation programme.

Things were even better for its earnings, with Chorus' EBITDA rising 5.8% to NZ$347 million and its net profit after tax jumping 56% to NZ$42 million.

In light of this strong performance, management has upgraded its full year EBITDA guidance to the range of NZ$665 million to NZ$685 million. This compares to its previous guidance range of NZ$640 million to NZ$660 million.

But that's not the only thing the company upgraded. Management has also lifted its FY 2022 dividend guidance to 35 cents per share from 26 cents per share. After which, the company expects to pay dividends of at least 40 cents per share in FY 2023 and 45 cents per share in FY 2024.

And the good news doesn't stop there. Also getting investors excited and boosting the Chorus share price is news that the company plans to return NZ$150 million to shareholders via a share buyback.

Management commentary

Chorus' CEO, JB Rousselot, was pleased with the company's performance and particularly the continued broadband growth in fibre areas.

He said: "The continued growth in fibre demand is a testament to the reliability fibre broadband is delivering through the challenges of the ongoing COVID pandemic. We saw the lockdowns and other public restrictions in the first-half ramp up the average data usage on fibre to new record highs of more than 600 gigabytes per month."

"Our fibre rollout is now close to completion with just 30,000 or so premises left to pass. More than 1.3 million homes and businesses have fibre at their doorstep; of these 67 per cent have now chosen to connect. During the first half of the year, we saw fibre connections grow by 47,000 to 918,000, and we're on track to achieve our target of one million fibre connections by the end of the year."

In respect to its dividend, Mr Rousselot notes that with Chorus on the cusp of becoming free cash flow positive and beginning to earn more than it is investing in the network, it has been able to update its dividend guidance for the next three years.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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