Vodafone, the FTSE 100 telecoms behemoth, has announced a surge in operating profit today, maintaining its financial forecast for the year following a series of asset sales.
The firm informed the market this morning that revenue for the first half of its fiscal year had increased by 1.6 per cent to €18.3bn (£15.2bn), with growth in service revenue partially offset by unfavourable foreign exchange movements, as reported by .
Overall, service revenue rose by 1.7 per cent to €15.1bn on a reported basis and 4.8 per cent organically. Vodafone's German division saw the most significant slowdown, with revenue falling 6.1 per cent in the second fiscal quarter.
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Meanwhile, revenue at Vodafone's business arm grew four per cent in the second quarter, while organic growth at its African business reached 9.7 per cent. The FTSE 100 company reported an overall operating profit of €2.4bn in the first half, up 28.3 per cent, primarily due to a €0.7bn gain from the sale of an 18 per cent stake in Indus Towers.
Adjusted earnings before interest, tax, depreciation, amortisation and adjusted lease liabilities (EBITDAaL) on an organic basis rose by 3.8 per cent to €5.4bn. The company attributed this growth to service revenue growth and reduced energy costs in Europe.
Vodafone reaffirmed its full-year guidance for adjusted EBITDAaL of €11bn and adjusted free cash flow of at least €2.4bn.
The telecommunications behemoth announced the near completion of its second €500 million share buyback programme, having repurchased 1.2 billion shares for a total cost of €1 billion by 11 November 2024.
Vodafone's CEO Margherita Della Valle remarked: "We continue to make good progress on our strategy to change Vodafone. The approval processes for our transactions in the 海角视频 and Italy are nearing conclusion. These will complete our programme to reshape the group for growth. We are also investing in Germany to strengthen our market position and taking steps to expand our B2B capabilities."
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Della Valle added, "As we move through this year of transition, our results in the first half have been consistent with our expectations and we are reiterating our full year guidance. We grew service revenue by 4.8 per cent and adjusted EBITDAaL by 3.8 per cent. We delivered good performances across our markets, with the exception of Germany, where we have been impacted as expected by the TV law change."
She concluded with confidence, "I am confident that the actions we are taking will deliver growth for Vodafone this year and a further acceleration into FY26."
In a difficult environment where competition is fierce, Richard Hunter, Head of Markets at interactive investor, has acknowledged Vodafone's initiatives towards asset disposals and cost reduction, but notes the company has significant strides to make to assure the market of its recovery trajectory.
Richard Hunter commented: "For Vodafone, years of underperformance are being addressed, with a major transformation of its business well underway. Even so, turning around a super tanker is never an easy task, especially when the company is in the midst of a highly competitive arena."
He further noted: "There is little to catch the eye of the bulls in this release, with the end game still some way off, and the share price has reacted accordingly. The decline adds to a drop of 4 per cent over the last year, which compares to a gain of 10.4 per cent for the wider FTSE100 and the not so steady decline the shares are down by 70 per cent over the last ten years and by 54 per cent in the last five leaves the price languishing at multi-decade lows."
"While some progress is clearly being made, prospects for the group remain uncertain. There is a major difference of opinion in those covering the stock's performance, leading to a market consensus which remains at a hold, with any positive catalysts seemingly remaining further down the line."