Vodafone (LON:VOD) is expected to report declines in full year revenue and earnings as it tackles growing competition in Europe and in India.
In a February trading update, the company reported a 4.6% decrease in third quarter revenue in Europe, as growth in Germany, Italy and Spain was offset by weakness in the UK.
Vodafone blamed a slump in the pound, lower revenues from mobile virtual network operators, the impact of roaming regulation and increased competition in its Enterprise business, which supplies telecommunications and IT services to large corporations.
In India, revenue growth slowed to 0.6% in the third quarter from 16% in the second amid a raging price war in the world’s second largest mobile phone market.
In March the group agreed to merge its troubled India arm with local firm, Idea Cellular Ltd., to help address the price war.
Nicolas Hyett, equity analyst at Hargreaves Lansdown, said despite the merger plan there may still some Indian pain to come especially as new entrant Jio has introduced free data.
“The entrance of Jio, a new network backed by the deep pockets of Reliance Industries, has turned the Indian market on its head. Vodafone’s Indian business is being de-consolidated and merged with Idea, another leading network,” Hyett said.
“While Jio’s model of offering free data to customers has taken a knock in the courts, it’s hard to foresee a rapid reversal of recent declines.”
Vodafone is forecast to report a 26% decrease in full year earnings per share to 4.9p and a 3.5% drop in revenue to £53.9bn.
Yet Hargreaves said the group’s finals may deliver some pleasant surprises as the fixed line broadband roll-out continues and organic service revenue is now positive in Germany, Italy and Spain.
“European fourth quarter numbers may not be glowing, but we’d expect to see some underlying growth,” Hyett said.
Speedy Hire reports full year results...
Speedy Hire Plc (LON:SDY) also reports its full year results, having already guided towards a 7% increase in revenue and pre-tax profit “well ahead of the prior year”.
The equipment and plant hire company revealed in a March trading update that that its business was on the mend after a string of profit warnings due to waning demand in the construction industry.
It said net debt at the end of March is expected to be less than £80mln - significantly lower than last year and after funding the Lloyds British acquisition. Speedy's hire fleet has reduced, resulting in an improvement in return on capital employed (RoCE).
Liberum said in a note that the company’s renewed focus on its small and medium enterprise clients is “continuing to show signs of success”.
“This momentum combined with a continued deleveraging of the balance sheet should provide the market with greater confidence in management’s ability to deliver on its ambition to material improve RoCE and cash returns to shareholder.”
Tuesday 16 May
Interims: Avon Rubber PLC (LON:AVON); Zytronic PLC (LON:ZYT); Jackpotjoy PLC (LON:JPJ)
Finals: NewRiver Retail Ltd (LON:NRR); BTG PLC (LON:BTG); Premier Foods PLC (LON:PFD); Vodafone Group PLC (LON:VOD)
Trading Statement: ITE Group PLC (LON:ITE); EI Group Plc (LON:EIG); CYBG PLC (LON:CYBG); easyJet PLC (LON:EZJ)