Vodafone pushed its full-year outlook higher today as growth in emerging markets and robust trading in northern Europe helped the world's largest mobile operator to post first-half results ahead of forecasts.
The results were boosted by strong growth in India and robust performances in Germany and Britain. Growth in Turkey has slowed but remains solid.
The group said that it was still facing tough conditions in Ireland, Greece and Portugal where it “continued to be impacted by the challenging economic environment and competitive factors”.
Tough conditions persisted in Italy, where organic service revenue fell 3 per cent in the second quarter from down 1.5 per cent in the first quarter, and in Spain, where it has struggled in a weak economy for several years.
Service revenue was slightly improved in Spain but it was still down 9.3 per cent in the second quarter from down 9.9 per cent in the first. The company took an impairment loss of £450 million in relation to Vodafone Greece.
It moved its outlook for full-year adjusted operating profit to the top end of its range, predicting profits of between £11.4 billion and £11.8 billion compared with an earlier forecast of £11 billion to £11.8 billion.
"They're really great numbers," analyst Will Draper at Espirito Santo told Reuters. "Revenues are up 1 percent on the consensus and they've raised the operating guidance towards the top end of the range. So I think they're pretty bullet proof.”
The group posted first-half revenue up 4.1 per cent to £23.5 billion and core earnings up 2.3 per cent to £7.5 billion. Analysts had been expecting group revenue at £23.4 billion and earnings at £7.4 billion pounds.
On the key industry metric of group organic service revenue, which relates to the provision of ongoing services, the group was up 1.4 per cent in the first half and up 1.3 per cent in the second quarter.
European organic service revenue was down 1.3 per cent, flat on the first quarter and ahead of forecasts of a 1.7 per cent decline. The group reiterated its outlook for free cash flow of £6 billion to £6.5 billion, despite missing forecasts due to what it described as a timing issue.
Vodafone Ireland said it had 2.22 million mobile customers at the end of September, with an increase of 17,000 across its total customer base during the third quarter.
It said minutes of use per customer in Ireland grew 0.6 per cent quarter-on-quarter to 268 minutes, compared to a European average of 179 minutes. Irish customers sent an average of 220 text messages per month, almost twice the European average (111).
"Although we remain mindful of the uncertain economic outlook, we are confident that we have the right strategy and capabilities to continue to perform consistently through top line growth, cost efficiency, investment and cash generation," Vodafone chief executive Vittorio Colao said.
Reuters
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