Vodafone Group PLC (LSE:VOD) lowered its sights for full-year earnings and cut its free cash flow forecast as it warned the worsening global macroeconomic climate, rising energy costs and increased inflation had hit financial performance.
Reporting half-year numbers, the FTSE 100-listed telco forecast full-year adjusted EBITDA at the low end of guidance between €15.0bn-€15.2bn (from €15.0bn-€15.5bn) while adjusted free cash flow is expected to be €5.1bn, down from around €5.3bn.
To mitigate this, Vodafone announced plans for a further €1bn of extra cost savings by 2026 through streamlining and simplifying its structure and accelerating the digitalisation of operations.
Price initiatives have also been put in place in 12 out of 13 European markets including contractual price increases, reduced promotional discounts and new ARPU accretive product portfolios.
For the half-year, Vodafone reported 2% growth in revenue to €22.9bn, driven by service revenue growth and higher equipment sales.
Adjusted EBITDAaL declined by 2.6% to €7.2bn with revenue growth offset by a prior year one-off legal settlement in Italy and commercial underperformance in Germany.
Operating profit increased by 12.0% to €2.9bn, reflecting a higher share of income from associates and joint ventures and lower depreciation and amortisation.
A dividend of €4.5c was declared.
Nick Read, group chief executive, commented: “We are confident that the ongoing delivery of our organic strategy and portfolio actions will underpin long-term growth and create value for shareholders."