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LONDON (Alliance News) - Mobile operator Vodafone PLC hiked its dividend for its most recently ended financial year, and guided for earnings growth in the year ahead, as it said it had returned to organic earnings growth for the first time in eight years.
Vodafone's organic figures are adjusted for merger and acquisition activity, as well as foreign exchange rate movements.
On this basis, the company's earnings before interest, tax, depreciation and amortisation rose 2.7%, as its group service revenue rose 1.5%. This included 2.5% organic service revenue growth in its fourth quarter, helped by stabilisation in Europe and growth in Africa, the Middle East and Asia Pacific.
Whilst organic service revenue decline in Europe for the year as a whole by 0.6%, trends improved throughout the year, and in the fourth quarter organic service revenue growth was 0.5%, as Vodafone's two largest markets, Germany and Italy, returned to growth.
On a reported basis Vodafone's Ebitda was GBP11.61 billion for its full financial year that ended in March, below the range of GBP11.7 billion to GBP12.0 billion that the company had guided and down from the GBP11.9 billion it reported the year before.
This was on revenue of GBP40.97 billion, down from GBP42.23 billion in the previous year.
Consensus expectations compiled by the company were for Ebitda of GBP11.64 billion, on revenue of GBP40.99 billion, down from GBP42.23 billion the previous year.
Vodafone proposed a final dividend of 7.77 pence per share, taking its total dividend for the year to 11.45p, up 2.0% from the 11.22p it paid in the previous year.
For the year ahead, Vodafone expects organic growth in Ebitda of between 3% and 6%, which it said implies a results between EUR15.7 billion and EUR16.2 billion. It expects free cash flow of at least EUR4.0 billion before the impact of mergers and acquisition, spectrum payments and restructuring costs.
Vodafone will switch to reporting in euros for the current year to end-March 2017, and will also declare dividends in euros for the year ahead. It said it plans to grow dividends per share yearly, demonstrating its confidence in future cash-flow generation, and dividends for the current year and beyond will be declared in euros and paid in euros, sterling and dollars.
The company said it successfully completed its GBP7 billion Project Spring investment programme, and following this completion now expects its total capital expenditure to be in the mid-teens as a percentage of its annual revenue. This is higher than the 13% to 14% range it had previously expected, as it said it believes there are "attractive investment opportunities available to further accelerate our growth and improve our long-term strategic positioning."
The company said it had now delivered "almost all" of the major targets it had outlined when it announced Project Spring, including extending its European 4G coverage to 87% of its footprint, just short of its 90% target as a result of delays, mostly in the UK and Germany.
It has extended its fibre coverage to 72 million homes, it said, and now has Internet of Things services available in 30 countries.
"We have now successfully concluded our Project Spring organic investment programme. This has transformed the quality of our technology, enhancing our customers' experience and enabling us to expand our Enterprise services. We are pleased to be the leader or co-leader in mobile network quality tests and net promoter scores in the majority of our markets. We have also posted a record quarter of net additions in fixed as our convergence strategy continues to accelerate," said Chief Executive Vittorio Colao in a statement.
"Looking forward, we will continue to invest in our customer excellence programmes in both mobile and converged services. I am confident we will sustain our positive momentum in the coming year, allowing us to maintain attractive returns for our shareholders," Colao added.
Shares in Vodafone were up 2.4% at 229.10 pence Tuesday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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