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LONDON (Alliance News) - A strong underlying performance ahead of market expectations helped shares in telecommunications giant Vodafone Group PLC move higher on Tuesday and prompted the group to edge up its guidance, despite its revenue and profit taking a hit from currency effects.
Shares in the company were up 4.7% to 224.60 pence mid-morning, one of the best performers in the FTSE 100.
The blue-chip telecommunications company said its pretax profit for the half to the end of September was GBP232.0 million, down from GBP406.0 million, thanks to slightly higher financing costs and lower investment income in the half. Earnings before interest, taxation, depreciation and amortisation fell to GBP5.79 billion, down 1.7% year-on-year, but rose 1.9% on an organic basis, which strips out currency effects and merger and acquisitions.
Thanks to the robust underlying performance, the group firmed up its guidance for the full year, raising the low-end of its Ebitda expectations to GBP11.7 billion from GBP11.5 billion, as the top end estimate of GBP12.0 billion remained in place.
Group revenue fell to GBP20.27 billion, down 2.3% year-on-year but again rising on an organic basis, up 2.8%. Group service revenue fell 3.7% to GBP18.43 billion, but also rose organically, up 1.0%. European revenue took the biggest hit, down 6.2%, primarily due to the weak euro but also thanks to softer markets, as organic service revenue from Europe fell 1.3%.
Service revenue from its Africa, Middle East and Asia Pacific business rose 1.8% year-on-year to GBP5.89 billion and rose 6.4% on an organic basis, again hit by adverse currency movements.
Vodafone said it will pay an interim dividend of 3.68 pence per share, up 2.2% from a year earlier.
"We have reached an important turning point for the group with a return to organic growth in service revenue and EBITDA in the first half of the financial year. Our customers are benefiting from the significant investments we are making in high speed mobile and fixed networks, as evidenced by the huge growth in demand for data and the increased loyalty to Vodafone services," said Vittorio Colao, Vodafone's chief executive.
"We expect progress to continue in the second half of the year," Colao added.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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