As investors eagerly await the upcoming FY24 financial results for Telstra Group Ltd (ASX: TLS), scheduled for release on Thursday, 15 August, there is considerable anticipation surrounding the performance of Australia’s largest telecommunications company. Telstra has undergone a notable transformation in recent years, and the latest financial report is expected to reflect continued progress and growth.
Expected FY24 Results
For the fiscal year 2024, Telstra is projected to achieve revenue of $23.66 billion, marking a 2.1% increase compared to FY23. This growth is anticipated to be driven by strong performance across its various divisions, with the mobile sector potentially contributing significantly to the overall revenue boost. As a key ASX communication stock, Telstra's performance in these areas will be closely watched by investors.
The increased revenue is expected to enhance Telstra’s earnings, thanks to the operational efficiencies and leverage within its business model. The company is forecasted to report earnings before interest and tax (EBIT) of $3.66 billion, which would represent a 7.8% year-over-year increase.
Net profit after tax (NPAT) is also predicted to grow by 6.2%, reaching $2.05 billion. This profitability is a crucial factor for investors, as it influences the valuation of Telstra shares. Based on these earnings, Telstra is anticipated to declare an annual dividend of 18 cents per share. This would equate to a fully franked dividend yield of 4.7% and a grossed-up dividend yield of 6.7%.
Regarding the company’s balance sheet, it is expected to end FY24 with net debt amounting to $12.8 billion. At the current share price, Telstra’s valuation stands at 21 times the estimated earnings for FY24.
Looking Ahead to FY25
As for the fiscal year 2025, Telstra is projected to continue its growth trajectory. Revenue is expected to reach $24 billion, with EBIT estimated at $3.7 billion and NPAT forecasted to be $2.06 billion. The dividend per share is likely to increase to 19 cents, translating into a fully franked dividend yield of 4.9% and a grossed-up dividend yield of 7%.
In FY25, Telstra's mobile sector is anticipated to be a key driver of industry returns on invested capital, contributing to the overall positive outlook for the company. Despite this optimistic forecast, challenges remain. These include potential declines in the enterprise division, increased competition in the fixed-line sector, cost inflation, and interest expense risks.
The stability in consumer churn intentions, despite rising mobile prices, is expected to provide a cushion against potential market fluctuations. The company’s ability to manage these challenges effectively while capitalizing on its growth opportunities will be crucial in maintaining its positive trajectory.
Telstra Group Ltd is set to report a strong performance for FY24 and is poised for further growth in FY25, reflecting its ongoing transformation and strategic initiatives. Investors will be keenly watching the upcoming results for additional insights into the company’s financial health and future prospects.