Vodafone (LON:VOD) expects its UK business to report stronger profits in the second half of the year, the Financial Times has reported. The comments came after the telecoms group updated investors on its half-year performance last week, posting a loss for the first six months of its financial year, while lifting its free cash flow outlook and leaving its payout to shareholders unchanged.
Vodafone’s share price has climbed higher in London in today’s session, having added 1.66 percent to 155.94p as of 14:56 GMT, and outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.47 percent higher at 7,047.01 points. The group’s shares have given up more than 31 percent of their value over the past year, as compared with about a 4.4-percent dip in the Footsie.
Group upbeat on UK business
Nick Read, chief executive of Vodafone and a former head of the UK business, told the FT on the sidelines of a telecoms conference in Barcelona that he expected the rate of underlying EBITDA growth to accelerate in the UK, with more cost savings coming through as a result of a ‘radical simplification’ of the business, in line with his wider strategy for the company.
He further noted that the unit’s underlying EBITDA had grown 12 percent in the first half, with the business having cut costs by six percent and improved the profitability of its business unit by shutting down 15 unprofitable legacy networks it inherited from Cable & Wireless.
Analysts on telecoms giant
HSBC, which is ‘neutral’ on Vodafone, set a price target of 180p on the shares on Friday. According to MarketBeat, the blue-chip telco currently has a consensus ‘hold’ rating and an average price target of 218.75p.