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TOP NEWS: Vodafone revenue and earnings slip and guidance falls short

Tue, 18th May 2021 08:58

(Alliance News) - Telecommunications firm Vodafone Group PLC on Tuesday posted a "resilient" performance for its recently ended financial year, despite a decline in revenue.

Vodafone shares were down 6.7% early Tuesday at 132.26 pence each, while the broader FTSE 100 index was 0.5% higher.

Revenue for the financial year to March 31 was EUR43.81 billion, down 2.6% from EUR44.97 billion the year before but beating market expectations of EUR43.64 billion. Vodafone cited the impact of the Covid-19 pandemic on roaming charges, amid foreign travel restrictions, for the decline in revenue. Also, Vodafone said revenue took a hit from lower handset sales, adverse foreign exchange movements and the disposal of Vodafone New Zealand.

This was offset somewhat by the acquisition of assets from Liberty Global PLC. In 2019, Vodafone completed a deal to acquire Liberty Global's operations in Germany, Czech Republic, Hungary and Romania for an enterprise value of EUR18.4 billion.

The company said the decline in revenue was partially offset by strong cost control.

Vodafone's pretax profit jumped to EUR4.40 billion in the recent year from just EUR795 million the year before, after financing costs fell to EUR1.03 billion from EUR3.55 billion.

In addition, Vodafone recorded a gain of EUR342 million on results of its associates and joint ventures compared to EUR2.51 billion loss the year ago. No impairment losses were reported for the year versus EUR1.69 billion in financial 2020.

Adjusted earnings before interest, tax, depreciation and amortisation fell 3.3% - or 1.2% on an organic basis - to EUR14.39 billion from EUR14.88 billion. Adjusted Ebitda was expected by market consensus at EUR14.54 billion, so this was missed slightly.

Free cash flow decreased by 12% year-on-year to EUR5.0 billion due to lower adjusted Ebitda and increased investment in network performance during the pandemic, partially offset by working capital movements including lower cash commissions.

Newbury, England-based Vodafone kept its dividend for the year steady at 9.0 cents, as expected by market consensus.

"I am pleased that we achieved full-year results in line with our guidance, and we exited the year with accelerating service revenue growth across the business, with a particularly good performance in our largest market, Germany," said Chief Executive Nick Read.

For the year ahead, Vodafone expects adjusted Ebitda between EUR15.0 billion to EUR15.4 billion, and adjusted free cash flow of at least EUR5.2 billion.

Consensus expectations for financial 2022 were at EUR15.22 billion for adjusted Ebitda and EUR5.44 billion for free cash flow.

By Evelina Grecenko; evelinagrecenko@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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