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(Alliance News) - Vodafone hailed a "solid quarter" for business and promised to create "value" for shareholders, as the telecommunications operator faces pressure from an activist investor.
In the three months to December 31, revenue rose 4.3% annually to EUR11.68 billion from EUR11.20 billion a year earlier. On an organic basis, growth was 3.7%.
Service revenue, which includes airtime usage, monthly access charges and roaming, climbed 3.1% annually to EUR9.65 billion. It was up 2.7% organically. This is where Vodafone generates most of its revenue.
"Our team has delivered another solid quarter, demonstrating the sustainability of our growth strategy and medium-term ambition. This performance keeps us firmly on track to deliver FY22 results in line with the higher guidance we set out in November," Chief Executive Nick Read commented.
"We remain focused on our operational priorities to strengthen commercial momentum in Germany, accelerate our transformation in Spain and position Vodafone Business to maximise EU recovery funding opportunities. We are also committed to creating value for our shareholders through proactive portfolio actions and continuing to improve returns at pace."
Late last week, Bloomberg reported that activist investor Cevian Capital had taken a stake in Vodafone, and the two had discussed how to boost the performance of the telecom operator.
Vodafone reaffirmed that it expects annual adjusted earnings before interest, tax, depreciation, amortisation and after leases between EUR15.2 billion and EUR15.4 billion for all of financial 2022. It expects EUR5.3 billion in free cash flow.
Vodafone shares were up 2.2% early Wednesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,572.67
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Hang Seng: Hong Kong market closed for Chinese New Year holiday
Nikkei 225: closed up 1.7% at 27,533.60
S&P/ASX 200: closed up 1.2% higher at 7,087.70
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DJIA: closed up 273.38 points, or 0.8%, at 35,405.24
S&P 500: closed up 30.99 points, or 0.7%, at 4,546.54
Nasdaq Composite: closed up 106.12 points, or 0.8%, at 14,346.00
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EUR: up at USD1.1277 (USD1.1247)
GBP: up at USD1.3532 (USD1.3505)
USD: down at JPY114.65 (JPY114.80)
Gold: down at USD1,795.88 per ounce (USD1,805.05)
Oil (Brent): soft at USD89.12 a barrel (USD89.50)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's key economic events still to come
China Chinese New Year. Financial markets closed in Hong Kong and Shanghai
1100 CET EU flash estimate euro area inflation
1100 GMT Ireland monthly unemployment
0815 EST US ADP national employment report
1030 EST US EIA weekly petroleum status report
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UK Prime Minister Boris Johnson is promising to break the link between "geography and destiny" as the government publishes its long-awaited blueprint for "levelling up" the country. The White Paper will set out a series of wide-ranging national "missions" – from improving public transport to ensuring access to 5G broadband – to be enshrined in law. At the same time, ministers are promising to provide more power to the regions in a "devolution revolution" with the offer of a London-style deal for any area of England that wants one. Labour however dismissed the plan as "more slogans" with "few new ideas". The move comes as Johnson struggles to regain the political initiative after the battering he has taken over lockdown parties in Downing Street and the Sue Gray report.
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BROKER RATING CHANGES
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Credit Suisse raises Ocado to 'outperform' ('underperform') target 1750(1500) p
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Jefferies raises Auto Trader to 'buy' (hold) - price target 870 (650) pence
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COMPANIES - FTSE 100
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Glencore said its operating environment "remained challenging in 2021". However, the miner and commodities trader said its performance was "largely" in line with expectations. It posted a 5% fall in annual copper output to 1.20 million tonnes from 1.26 million in 2020. For cobalt, a key mineral in electric vehicle batteries, output rose 14% to 313,000 tonnes from 274,000 tonnes. Zinc and silver output each fell 4%, and nickel declined 7%, while gold and lead fell by 12% and 14%, respectively. Coal production was 3% lower, though ferrochrome output surged 43%, amid an easier lockdown-hit comparative in South Africa. "Overall, our operations largely performed in line with guidance expectations. We completed the Cerrejon acquisition and Ernest Henry disposal in January, such transactions being consistent with our continued strategy to simplify and align our portfolio with the materials needed for the energy transition and the responsible decline of our coal business," Chief Executive Gary Nagle said. Glencore left guidance for 2022 unchanged.
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Mining peer Anglo American said diamond sales by its De Beers arm declined year-on-year in the first sales cycle of 2022. Cycle one relates to sales between January 17 and February 1. Sales fell 0.5% to USD660 million from USD663 million a year earlier. However, sales were 96% higher than the USD336 million achieved in the tenth cycle of 2021.
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Fellow miner Rio Tinto, fresh from releasing a damning report on its own workplace culture, noted an announcement by 86%-owned investee Energy Resources of Australia. ERA said the cost of rehabilitating the Ranger mine in Australia's Northern Territory could cost as much as AUD2.2 billion, about GBP1.16 billion. A previously announced estimate was AUD973 million. The revised date for completion has been pushed back a year to the fourth quarter of 2028. Rio said it is committed to rehabilitating the Ranger project area to the environmental standard of the adjacent Kakadu National Park.
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COMPANIES - FTSE 250
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Gambling software firm Playtech said its takeover by Sydney-listed Aristocrat Leisure is likely to not be backed by its shareholders, based on proxy votes. The vote requires 75% shareholder approval. "The board has been actively considering its options for maximising shareholder value in a scenario where the Aristocrat offer does not proceed and lapses, and in so doing has been evaluating attractive M&A proposals it has received from third parties in respect of Playtech's B2B and B2C businesses," the company added. In January, one-time Playtech suitor JKO Play confirmed it does not plan on making a bid to buy the gambling software company. JKO Play is controlled by Keith O'Loughlin and Eddie Jordan, the former boss of a Formula One team. JKO pulling out of the race left Aristocrat in pole position to complete its agreed takeover. On current trading, Playtech said its performance has been strong since its last trading update back in November.
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Ryanair and Wizz Air both said they carried fewer passengers in January than in December, as restrictions related to the Omicron variant of Covid-19 "badly affected" traffic. Ryanair carried 7.0 million passengers, down from 9.5 million in December, though up from 1.3 million in January 2021. Load factor was 79%, down from 81% in December but up from 69% a year ago. For Wizz Air, passengers in January totalled 2.4 million, down from 2.6 million in December but up from 573,692 a year ago. Load factor for Wizz was 79.6%.
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COMPANIES - GLOBAL
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Sony upgraded its full-year net profit forecast, buoyed by the success of its latest Spider-Man movie and strong results in the gaming sector despite the global chip shortage. The Japanese consumer electronics and media firm already logged a record net profit in 2020-21, with a pandemic boom in gaming swelling its profits. Although the huge demand for gaming is tapering as virus restrictions are eased in many countries, Sony said it is continuing to see a strong performance across sectors including film, gaming and electronics. The conglomerate now projects a net profit of JPY860 billion, about USD7.4 billion, for the fiscal year ending in March, having already hiked its full-year estimate to JPY730 billion in the previous quarter.
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Swiss pharmaceutical firm Novartis reported that quarterly profit has risen on the back of its Roche divestment. The company's fourth-quarter net income climbed to USD16.31 billion or USD7.29 per share from the prior year's USD2.10 billion or USD0.92 per share. The latest quarter results benefited from the Roche divestment gain of USD14.6 billion. Core net income for the fourth quarter was USD3.14 billion, an increase of 3%, or 6% at constant currency rates, compared to the previous year, mainly driven by growth in core operating income, partly offset by lower income from associated companies due to the divestment of investment in Roche and a higher tax rate. Core earnings per share were USD1.40 compared to USD1.34 last year.
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A group of pharmaceutical companies and distributors agreed to pay USD590 million to settle lawsuits connected to opioid addiction among Native American tribes, according to a US court filing. The agreement is the latest amid a deluge of litigation spawned by the US opioid crisis, which has claimed more than 500,000 lives over the last 20 years and ensnared some of the largest firms in the world of American medicine. The companies involved in the latest agreement include Johnson & Johnson and McKesson, according to a filing in an Ohio federal court by a committee of plaintiffs in the case.
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Wednesday's shareholder meetings
Edinburgh Worldwide Investment Trust PLC - AGM
Imperial Brands PLC - AGM
Playtech PLC - GM re takeover by Aristocrat Leisure
Premier Miton Group PLC - AGM
Scottish Investment Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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