Vodafone posts record loss, keeps shareholders sweet with increased divided

30 May 2006

Vodafone has unveiled a raft of cost cutting measures as it posted a record GBP14.9 billion (USD27.9 billion) pre-tax loss for its fiscal year ended 31 March 2006, on the back of a massive acquisitions impairment charge. Net loss for the year widened to GBP21.9 billion, or GBP0.35 pence a share, compared with a profit of GBP6.41 billion a year earlier. Revenues rose to GBP29.4 billion pounds, up from GBP26.7 billion after the company restated the previous year’s figure to exclude the Japanese business Vodafone KK which was sold in April. The group added 21.6 million customers over the twelve months, bringing its total to 170.6 million.

The UK-based group’s pre-tax loss represents the second-biggest ever posted by a UK company, falling a little short of a GBP16.1 billion loss that Vodafone itself recorded in 2002. The bulk of the losses were attributed to a GBP23.5 billion write down on the group’s acquisition of Mannesmann of Germany in 2000. Attempting to counteract the negative results, Vodafone outlined proposals to cut more than 400 jobs at its head office, streamline its supply chain, consolidate its data centres and contract out its IT development and maintenance activities as part of plans designed to slash at least GBP500 million from its current annual cost base of around GBP4.2 billion. It also promised to increase the cash return to its investors by 49%, up to GBP9 billion, after earlier guaranteeing a GBP6 billion dividend following the sale of Vodafone KK. However, the company glossed over the subject of job losses at its numerous worldwide operations, which have been predicted to reach 6,000.

United Kingdom, SoftBank Corp, Vodafone Group