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Vodafone 'pursuing a range of opportunities' but concerned by inflation

Published: 07:39 17 May 2022 BST

Vodafone Group PLC -

Vodafone Group PLC (LSE:VOD) reported underlying profits and cashflow in line with expectations but said both could be lower in the coming year due to inflation.

The FTSE 100 telecoms group posted final results that showed a 10% decline in reported profit before tax to €3.95bn for the year ended 31 March 2022, though underlying earnings (EBITDAaL, which also excludes leases) rose 5% to €15.2bn on revenue up 4% to €45.6bn.

Adjusted free cash flow improved to €5.4bn, which was just ahead guidance for “at least €5.3bn”.

Net debt stood at €41.6bn at year-end, down from €40.5bn a year earlier, while the dividend was kept at €0.09 per share.

For the year to next March, adjusted EBITDAaL is expected in a range of €15.0-€15.5bn, with adjusted free cash flow expected to be circa €5.3bn.

“The current macroeconomic climate presents specific challenges, particularly inflation, and is likely to impact our financial performance in the year ahead,” the company said, with the impact of recent energy price inflation, exacerbated by the war in Ukraine, factored into its latest forecasts.

With a major activist shareholder, Cevian Capital, putting pressure on the board to step up the pace of change, and this week a new largest shareholder, Emirates Telecoms Group, also looming, if boss Nick Read delivers only that basic guidance his position would surely be called into question.

There was little given away in his statement in the results, however, apart from to say the group’s “near-term operational and portfolio priorities remain unchanged from those communicated six months ago”, ie being open to M&A in UK, Italy and Spain, and a focus on improving the commercial performance in Germany, pursuing opportunities with its separately listed Vantage Towers business and strengthening market positions in Europe.  

On a video presentation Read added that the commercial performance in Germany has weakened, in terms of new customer additions, to “an unsatisfactory level” and on strategic developments stressed that “we’re actively pursuing a range of live opportunities”.

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