Vodafone hails strong growth outlook as sales and earnings increase

(Alliance News) - Vodafone Group PLC on Tuesday reported higher full-year earnings and sales, reflecting strong service revenue increases with Germany swinging to growth in the fourth quarter.

"After the transformation of the last three years, we are now a simpler company with a stronger growth outlook," said Vodafone Chief Executive Margherita Della Valle.

The Berkshire, England-based telecommunications provider swung to a pretax profit of EUR1.86 billion in the financial year to March from a EUR1.48 billion loss the year prior.

Revenue grew 8.0% to EUR40.46 billion from EUR37.45 billion, due to strong service revenue growth and the consolidation of Three UK, partially offset by foreign exchange movements.

Service revenue was up 8.8% to EUR33.48 billion from EUR30.76 billion, or by 5.4% on an organic basis with growth in all segments except Germany.

In Germany, organic service revenue decreased 0.2% for the financial year, with gradual improvement throughout the year to 1.3% growth in the fourth quarter.

In the UK, organic service revenue increased 0.3% with growth in Consumer and Wholesale segments, partially offset by Business decline due to planned managed services contract terminations.

Organic service revenue grew 0.5% in Other Europe with good performance across markets offset by competitive pressure in Portugal. Service revenue in Turkey increased 10.8%.

Africa maintained double-digit organic service revenue growth of 12.9%, supported by growth above inflation in Egypt and Vodacom's international markets.

Business organic service revenue grew 3.2%, with double digit growth in digital services.

Adjusted earnings before interest, tax, depreciation and amortisation and after leases grew to EUR11.35 billion from EUR10.93 billion but missed company compiled consensus of EUR11.48 billion.

Adjusted basic earnings per share totalled 10.72 euro cents, up from 7.87 cents a year ago.

Operating profit was EUR2.84 billion compared to a loss of EUR411 million the year before.

Adjusted free cash flow edged up 2.9% to EUR2.62 billion from EUR2.55 billion. Net debt increased to EUR25.41 billion from EUR22.40 billion.

The total dividend was increased 2.5% to 4.6125 euro cents from 4.5 cents.

Shares in Vodafone were down 3.0% at 116.80 pence each in London on Tuesday morning with the wider FTSE 100 down 0.8%.

Vodafone forecast financial 2027 EbitdaaL of EUR11.9 billion to EUR12.2 billion and adjusted free cash flow of EUR2.6 billion to EUR2.9 billion.

"Looking ahead, we will continue to drive continuous improvements across our business, with customer experience as our number one priority. We are now well set for mid-term growth," said CEO Della Valle.

"Our growth portfolio gives us the confidence in our medium-term ambition to deliver double-digit adjusted free cash flow growth, driving continued adjusted free cash flow growth in euro terms," Vodafone added in a statement.

By Jeremy Cutler, Alliance News reporter

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