Vodafone hails strong growth outlook as sales and earnings increase

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 €1.86 billion in the financial year to March from a €1.48 billion loss the year prior.

Revenue grew 8.0% to €40.46 billion from €37.45 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 €33.48 billion from €30.76 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 €11.35 billion from €10.93 billion but missed company compiled consensus of €11.48 billion.

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

Operating profit was €2.84 billion compared to a loss of €411 million the year before.

Adjusted free cash flow edged up 2.9% to €2.62 billion from €2.55 billion. Net debt increased to €25.41 billion from €22.40 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 €11.9 billion to €12.2 billion and adjusted free cash flow of €2.6 billion to €2.9 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.

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