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(Alliance News) - Vodafone said Monday its first-half performance was in line with expectations as it swung to profit and maintained its interim dividend.
Revenue for the first half to September 30 fell 2.3% to EUR21.43 billion, though the FTSE 100 telecommunications company swung to a pretax profit of EUR2.05 billion from a EUR511 million loss a year ago.
"Losses were recognised in the comparative period relating to Vodafone Idea Ltd, which outweighed a EUR1.1 billion profit recorded on the disposal of Vodafone New Zealand. The current period includes a gain of EUR1.0 billion arising on the merger of Vodafone Hutchison Australia into TPG Telecom Ltd," the firm noted.
Adjusted earnings before interest, taxes, depreciation and amortisation fell 1.9% organically to EUR7.02 billion.
"Today's results underline increased confidence in our full-year outlook. We are reporting a resilient first half performance, and we continue to see good commercial momentum across the group," said Chief Executive Nick Read.
Vodafone said full-year adjusted Ebitda is expected to be between EUR14.4 billion and EUR14.6 billion in the 2021 financial year, and it expects free cash flow - pre-spectrum and restructuring - to be at least EUR5 billion.
Read said: "Covid-19 and the reduction in roaming revenues, through the significant reduction in international travel, is currently obscuring our underlying commercial progress, with Q2 service revenue growing by 1.5% excluding roaming. We are now two years into our longer-term strategy to transform Vodafone into a business that enables a digital society, generating both sustainable growth and attractive returns. We are executing at pace, but there remains more to be done to achieve our goals."
Vodafone kept its dividend steady at 4.50 euro cents.
Vodafone shares were up 2.7% early Monday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.6% at 6,353.91
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Hang Seng: up 0.8% at 26,353.45
Nikkei 225: closed up 1.4% at 29,479.81
DJIA: closed up 399.64 points, 1.4%, at 29,479.81
S&P 500: closed up 1.4% at 3,585.15
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GBP: up at USD1.3216 (USD1.3172)
EUR: up at USD1.1853 (USD1.1824)
Gold: down at USD1,889.51 per ounce (USD1,891.34)
Oil (Brent): up at USD43.28 a barrel (USD42.88)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
1100 GMT Ireland goods exports and imports
0830 EST US Empire State manufacturing survey
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Talks on a future trading relationship between the UK and EU post-Brexit continue this week as the clock continues to tick until the end of the transition period. David Frost is in Brussels for another round of negotiations ahead of a European Council video summit on Thursday which has been touted as a deadline for a draft deal. The UK formally left the EU in January, but will continue to follow the bloc's regulations until the end of the year – just over six weeks away. If no agreement is in place at the end of December, goods travelling between the two parties will be subject to tariffs set out by the World Trade Organisation. The issues which are still to be ironed out are thought to include the ongoing row over fishing rights, how any deal between the two parties would be governed, and the "level playing field" measures aimed at preventing unfair competition on issues including state subsidies.
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UK house prices dipped slightly in November, property portal Rightmove said, despite sellers rushing to beat the March stamp duty deadline. According to Rightmove, average UK house prices slipped 0.5%, or GBP1,505, to GBP322,025 in November, from GBP323,530 in October. In October, prices had risen 1.1% monthly. Annually, prices rose 6.3%, eclipsing the yearly growth of 5.5% in October. "New sellers appear to be pricing more keenly, to improve their chances of getting a quick sale and beating the March stamp duty deadline," Rightmove said.
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BROKER RATING CHANGES
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BERENBERG CUTS INFORMA TO 'HOLD' ('BUY') - TARGET 610 (535) PENCE
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HSBC RAISES WIZZ AIR TO 'BUY' ('HOLD') - TARGET 5,000 (3,400) PENCE
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JEFFERIES RAISES PLUS500 TO 'BUY' ('HOLD') - TARGET 1,760 (1,730) PENCE
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COMPANIES - FTSE 100
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Defence and medical technology company Smiths Group said it delivered a "good" performance in the first quarter. Revenue for the three months to October 31 for continuing operations was down 2% on an underlying basis, a figure which it said "underpins" confidence in meeting market expectations for the full-year. John Crane performed as expected and Smiths Detection delivered a strong performance in Aviation during the quarter, which was offset by the Other Security Systems area. Flex-Tek delivered "strong industrial sales" that more than offset Aerospace weakness, while "good momentum" continued in Smiths Interconnect. For Smiths Medical, which is excluded from the group's continued operations, revenue was up 4% on an underlying basis. Smiths added that its strategic restructuring programme is "progressing well" and will delivered the anticipated GBP30 million of savings in the current financial year, and the full GBP70 million benefit in the 2022 year.
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JD Sports Fashion has joined the race to acquire Debenhams, potentially prising the department store chain away from high street rival and Sports Direct owner Frasers Group, the Daily Telegraph reported on Saturday. The newspaper said JD Sports is looking into the finances at Debenhams after being granted access over the past two weeks. Debenhams has among the UK high street stalwarts hit by Covid-19, mounting further pressure on the retailer's already fragile finances. In August, it emerged that Debenhams planned to cut 2,500 jobs across its stores and warehouses. Mike Ashley's Frasers owns about a third of the shares in Debenhams, which went into administration back in April, for the second time in roughly a year.
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COMPANIES - FTSE 250
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Diploma's full-year profit fell by a fifth but the firm still raised its dividend and looked to the newly-started year with confidence. Revenue for the financial year to September 30 slipped 1% to GBP538.4 million, and pretax profit fell 20% to GBP66.7 million from GBP83.5 million. Administration costs rose to GBP110.6 million from GBP100.2 million, the manufacturer of medical diagnostic instruments, seals and cables said. The firm lifted its total dividend for the year by 3% to 30.0 pence, paying it all as a final dividend to make up for a skipped interim dividend. Looking to the new financial year, Diploma said it expects to deliver another "strong performance", with a return to underlying mid-single digit growth and "historic" margins. "The group has reported a resilient financial performance with strong margins and cash flow generation. All sectors saw improving revenue momentum in Q4 which is expected to continue into 2021," said Chief Executive Johnny Thomson.
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IT services provider Kainos Group reported a sharp rise in interim revenue, with profit doubling. Revenue for the six months to September 30 rose 23% year-on-year to GBP107.2 million, and pretax profit doubled to GBP24.0 million from GBP12.0 million. Kainos boosted its interim dividend by 83% to 6.4p, and also said it paid out a special dividend of 6.7p in September. "As part of the Covid-19 related cost-reduction measures the board had previously elected not to declare a final dividend for the year ended 31 March 2020. In light of the group's performance, during the period, a special dividend of 6.7 pence per share was approved by the board and paid on 4 September," Kainos explained. The firm said remains confident in its outlook for the remainder of the year, which is underpinned by a "robust" pipeline and "significant" contracted backlog.
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Stagecoach said it has agreed an extension to its bank covenant waivers. Back in June, it said, it took the "precautionary measure" of agreeing covenant waivers in respect of the periods ending October 31, 2020 and May 1, 2021 with its group of lending banks for facilities expiring in March 2025. "Further waivers have now been agreed with the same group of lending banks in respect of the period to 30 October 2021. As an alternative to the covenants, we have agreed to a minimum liquidity threshold as at 30 October 2021," said Stagecoach. The public transport provider stressed, though, that it would have complied anyway with the originally agreed bank covenants for the period ended October 31 on its latest estimates.
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A coronavirus testing site in Norfolk has closed after several members of staff tested positive for Covid-19, its operator G4S said. People with tests booked at the Postwick Park and Ride site on the eastern edge of Norwich were turned away on Sunday following the outbreak. Security firm G4S said the drive-through facility will now be deep cleaned and reopened "as soon as possible". As first reported by the Eastern Daily Press, there have been four confirmed coronavirus cases among staff on the site within the past 72 hours. Meanwhile, early Monday, G4S, as part of its effort to fend off acquisition bids, said it has set a medium-term target of 25% annual revenue growth for its retail cash solutions unit.
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COMPANIES - GLOBAL
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The UK will be the first country to run final-stage trials of a coronavirus vaccine being developed by a company owned by Johnson & Johnson. The phase-three trial of the vaccine from pharmaceutical company Janssen starts on Monday and will be the first of its two-dose study. The jab has already undergone phase one and two trials, and interim analysis of the single-dose study suggests the Covid-19 vaccine candidate induces a robust immune response and is generally well-tolerated. For the two-dose study, researchers are aiming to recruit around 6,000 UK participants – from a total of 30,000 people globally – at 17 sites across the country.
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Banco Bilbao Vizcaya Argentaria said it has agreed to sell its US subsidiary for USD11.60 billion in cash. PNC Financial Services Group, a New York-listed financial services firm, will buy the assets, in a deal which is expected to be completed halfway through next year. BBVA said the deal enhances its "already strong financial position" and creates value for shareholders. The Spanish financial services firm said it plans to increase shareholder distributions "with a sizeable buyback". The company said the disposal will improve its Common Equity Tier 1 (fully loaded) ratio by about 300 basis points.
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Monday's Shareholder Meetings
Smiths Group PLC - AGM
JPMorgan Brazil Investment Trust PLC - GM re liquidation of company
European Opportunities Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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