Telkom is expecting a headline earnings per share (HEPS) drop of between 15% and 25%, impacted by a higher tax rate and increased labour costs. This is according to a trading statement published by the group on Friday.
Telkom said it is busy finalising its annual results for the year ended 31 March, which will be released on the JSE's Stock Exchange News Service on 28 May.
Both HEPS and basic earnings per share (BEPS) are expected to decrease by between 15% and 25% when compared to the prior year. HEPS will likely be between 611.1cps and 541.1cps, compared to 721.1cps at the end of March 2017. BEPS will be between 628cps and 554.1cps, down from 738.8cps last year.
"This is due to a significant increase in our effective tax rate from the 15.2% in the prior year to slightly below the South African corporate tax rate and higher labour costs driven by both inflationary and market-related adjustments," Telkom said.
SA's corporate income tax rate is currently 28%.
Telkom said the results performance is in line with the revised guidance communicated to shareholders in November.
The telco said the prior year's reported earnings were impacted by voluntary severance packages and voluntary early retirement packages of R66 million, with a related tax benefit of R13 million.
The news did not do much to the Telkom share price, with the stock dropping only 0.3% on Friday, closing at R53.84 per share.
However, over the past year, the stock has fallen 23.34%, but year-to-date the share price has risen by 14.6%. Telkom has a market capitalisation of R27.5 billion.
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