Vodafone share price falls as FY profit offsets quarterly sales growth

Shares in Vodafone Group (LON:VOD) fell almost two percent at the opening bell this morning after signs of stabilisation in the company’s fourth quarter failed to negate a decline in its full-year profit.

Vodafone posted a rise in its quarterly sales measurement for the first time in nearly three years, “reflecting a steady recovery in Europe and continued good growth in Africa, Middle East and Asia Pacific”. Final results from the mobile telecoms giant showed a return to growth in the last three months of the year, with organic service revenue — the measure followed by City analysts that strips out items such as currency fluctuations — up 0.1 percent, beating consensus forecasts.
For the full year, however, sales fell 1.6 percent on an organic basis. Earnings before interest, tax, depreciation and amortisation (EBITDA) for the 12 months the end of March was down 6.9 percent to £11.9 billion — in line with its guidance range of between £11.6 billion and £11.9 billion. This was on annual revenue of £42.22 billion – 10.1 percent up year-on year.
Vodafone chief executive Vittorio Colao commented on the group’s performance: “It has been a year of continued progress, culminating with a return to organic growth in Q4. We have seen increasing signs of stabilization in many of our European markets, supported by improvements in our commercial execution and very strong demand for data.”
Vodafone, which has been hit hard by the constraints on consumer spending in its big European markets and by regulator-imposed price cuts, has been investing significantly to improve its mobile networks under the £7 billion ‘Project Spring’ initiative, which is beginning to lead to growth in data usage levels and a more rapid uptake of 4G services.
“We have significant opportunities ahead of us, with only 13 per cent of our European mobile customers using 4G, and our market share in fixed services only a fraction of our share in mobile,” Colao remarked.
Vodafone said that the current financial year “will be another very important one for execution” as the company is set to complete the ‘Project Spring’ programme while continuing with the integration of acquired cable businesses. The group forecast a range for 2015-16 EBITDA of £11.5 billion to £12 billion. Possibly indicating a return to growth following seven straight years of earnings decline on an organic basis.
As of 09:40 BST, Tuesday, 19 May, Vodafone Group plc share price is 227.63p.