The FINANCIAL — UK-based telecom giant Vodafone Group Plc. on November 10 said its first-half profit before tax declined from the prior year, amid a drop in revenues. However, Earnings Before Interest, Tax, Depreciation and Amortization, returned to growth in the first half, and the company lifted its forecast for the year. The stock advanced more than 4 percent in early trade.
Profit before tax fell to 232 million pounds from last year’s 406 million pounds, according to Nasdaq.
On an adjusted statutory basis, adjusted profit before tax was 1.089 billion pounds, while it totalled 1.074 billion pounds in the previous year.
Loss attributable to owners of the parent was 1.7 billion pounds, compared to profit of 5.42 billion pounds last year. Loss per share was 6.40 pence, while earnings per share totalled 20.37 pence last year.
The latest results included an income tax expense of 1.82 billion pounds, compared to such a credit of 5.1 billion pounds in the prior year.
On an organic basis, EBITDA rose 1.9 percent to 5.8 billion pounds.
Group revenue slipped 2.3 percent to 20.266 billion pounds from 20.752 billion pounds in the prior year. Organic revenue growth was 2.8 percent.
Total revenue in Europe fell 4.8 percent to 13.13 billion pounds, but edged up organically. In Africa, Middle East and Asia Pacific or AMAP, revenue grew 3 percent and organic revenue rose 8.2 percent.
Meanwhile, group Service revenue decreased 3.7 percent to 18.4 billion pounds, but grew one percent organically.
Service revenue in Europe declined 1.3 percent organically, reflecting continued competitive pressures in several markets. However, revenue trends continued to improve.
In AMAP, service revenue climbed 6.4 percent organically. The fundamental drivers of these businesses – customer growth and strong demand for mobile voice and data services – remain very health, the company noted.
Vodafone said customer demand for data continues to grow very quickly, with Data traffic in the first half growing 75 percent.
Vittorio Colao, group chief executive, said, “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…We expect progress to continue in the second half of the year.”
The Board recommended an interim dividend per share of 3.68 pence, up 2.2 percent year-on-year.
Vodafone said it would change its reporting currency from sterling to euro from April 1, 2016.
Looking ahead, Vodafone said its overall performance in the first half of the current financial year has been in line with the company’s expectations, and the firm expects revenue and profitability trends to improve in the second half.
Vodafone now expects EBITDA for 2016 to be in the range of 11.7 billion pounds to 12.0 billion pounds, and free cash flow to be positive, after all capex.
In July, the forecast was for EBITDA to be in the range of 11.5 billion pounds to 12.0 billion pounds.
The stock climbed 4.1 percent in early trade to 223.13 pence.
Discussion about this post