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Vodafone sees a drop in profits

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Vodafone sees a drop in profits

Vodafone Group announced a fall in annual pretax profit but saw revenue rise in its preliminary results on Tuesday.

Vodafone Group recorded a 4% increase in total revenue from €43.8bn to €45.6bn as a result of contributions from equipment revenue and growth in Europe and Africa.

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The group said adjusted EBITDA rose by 5% from €14.4bn to €15.2bn owing to revenue growth, cost control and a legal settlement in Italy. The group’s adjusted EBITDA was within the management’s updated range.

Vodafone’s operating profit noted an 11.1% rise to €5.7bn from €5.1bn in 2021 as a result of higher adjusted EBITDA and lower depreciation and amortisation on the group’s assets.

The telecommunications company recorded a pretax profit of €3.95bn which was a 10% fall compared to €4.4bn in 2021 and said inflation may hinder results in 2022.

Vodafone stated basic EPS surged from 0.38 Eurocents in 2021 to 7.2 Eurocents in 2022.

The group noted a 5% rise in cash inflow from €17.2bn to €18.1bn in 2022 and net debt rose to €41.6bn from €40.5bn due to a €2bn share buyback programme to combat dilution linked to mandatory convertible bonds.

Vodafone declared a total dividend of 9 Eurocents which was the same 2021, and a final dividend of 4.5 Eurocents.

On Monday, e& acquired a stake in Vodafone which have had no impact on results and there has been no further updates since.

Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown said, “Vodafone’s shares were down 3% after the market opened this morning, as investors sounded a tepid response to full year results. While the underlying operational performance was sturdy enough, the market was clearly expecting more.

“Subdued sentiment may well be coming from the warning that Vodafone isn’t immune to the wider macroeconomic challenges we’re seeing. Either way, the group has recently acquired a new largest shareholder, in the form of Emirates Telecommunications, which now owns 9.8% of Vodafone.” 

“Emirates Telecommunications has said this isn’t the beginnings of a takeover bid, and is supportive of Vodafone’s position. The premium paid for the stake suggests there is indeed a lot of faith in a turnaround for the battered Vodafone group.”

“While progress is steady, it’s hard to get away from the fundamental truth for telecoms – there is very little to differentiate from competitors in any real way other than price. That keeps a lid on margins. Full year results haven’t been a disaster, but they aren’t exactly shiny either.”

https://ukinvestormagazine.co.uk/vodafone-sees-a-drop-in-profits/

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