Vodafone lifts full-year guidance despite slide into red

(Sharecast News) - Telecoms giant Vodafone upped full-year guidance on Tuesday, despite a slide into the red and ongoing weakness in Germany. The blue chip saw total revenues rally 11.4% in the six months to September end to €21.9bn, following a 12.8% improvement in service revenues to €18.4bn. Adjusted earnings before interest, tax, depreciation, amortisation and lease-related expenses grew 12.6%, or by 6.4% on an organic basis, to €6.5bn.

However, losses came in at €3.6bn, compared to profits of €1.1bn a year previously. Vodafone attributed the slide to non-cash accounting charges, including an impairment charge in Germany, primarily driven by adverse changes in interest rates, and a write-down of deferred tax assets in the UK.

Yet the group remained confident looking forward, and its upgraded guidance ranges. It now expects adjusted EBITDAaL to come in between €13.2bn and €13.4bn, and adjusted free cash flow of €2.8bn and €3bn. It had previously forecast for EBITDAaL of between €13bn and €13.3bn, and cash flow in the range of €2.6bn to €2.9bn.

Margherita Della Valle, chief executive, said it had been a "strong start" to the year, although acknowledged Germany was continuing to underperform, as it battled stiff competition and falling customer numbers. Service revenues in the country ticked up 0.4%, compared to a 0.9% uplift in the UK and a 13.4% surge in Africa.

She said: "Germany is not yet where it needs to be. We have a clear action plan in progress, which is structurally simplifying our German operations and improving customer satisfaction across all of our services."

The company is targeting a net reduction of European net operating expenses of over €200m in the current year, as it moves towards its long-term net target of over €1bn. Vodafone said €200m of gross savings were made during the first half, including through 3,000 job cuts across Europe and share operations.

On Monday, Vodafone's German division confirmed it would look to axe or relocate another 2,300 jobs over the next two years. The business currently employs around 12,000 people in the country.

See latest RNS on Sharecast