Solid first half for Vodafone Group prompts updated guidance on full-year operating profit

8 Nov 2011

British mobile giant Vodafone Group has released its financial results for the six months ended 30 September 2011, revealing a 4.1% year-on-year increase in consolidated revenues. For the first half of its 2011-12 financial year Vodafone generated total revenues of GBP23.52 billion (USD36.75 billion), while turnover grew organically by 2.2%.

Group service revenues meanwhile rose by 1.4% on an organic basis, although the group’s European operations saw a 1.3% decline in service revenues against H1 2010. Vodafone did, however, note that its subsidiaries in northern Europe had actually recorded growth in service revenues, with Vodafone UK posting a y-o-y increase of 2.1%, while Vodafone Germany remained relatively static, posting a 0.2% rise in turnover. Southern European cellcos Vodafone Spain and Vodafone Italy dragged results down though, with the former seeing a 9.6% y-o-y drop in service revenues against the first six months of 2010 on an organic basis. Vodafone Italy meanwhile posted a 2.3% decline in revenues in the second quarter of the year, which the parent company attributed to ‘a decline in consumer confidence and an incremental impact of 0.4 percentage points from mobile termination rate cuts’. The group’s Africa, Middle East and Asia Pacific (AMAP) unit meanwhile saw service revenues rise by 8.4% in H1 2011, with Indian cellco Vodafone Essar reporting turnover growth of 18.4% in the second quarter, boosted by new SMS termination charges. In Australia however, on the back of network and customer service issues, revenue tumbled by 8.1% in the 2Q11.

Group earnings before interest, tax, depreciation and amortisation (EBITDA) was up 2.3% at GBP7.53 billion, while the EBITDA margin was down 0.6 percentage points compared with H1 2011, which Vodafone said was primarily the result of re-pricing in Spain and the performance of its Australian unit. European EBITDA was flat y-o-y at GBP5.56 billion, with the EBITDA margin down 1%, with the margin decline ‘almost entirely driven by a 6.1% margin decline in Spain as a result of price reductions and the macroeconomic environment’. EBITDA for the group’s AMAP division meanwhile rose by 3.6% to GBP2.00 billion.

On the back of the results the group revealed it was raising its forecast for full-year adjusted operating profit; Vodafone has said it now expects to see adjusted operating profit to be between GBP11.4 billion and GBP11.8 billion in FY2011-12, the upper half of its previous guidance level.

Commenting on the results, Vodafone Group CEO Vittorio Colao said: ‘A year on from announcing our updated strategy, we are making clear progress. We are gaining share in most of our major markets, through our focus on superior network quality and an improved customer experience. In addition, we are achieving sustained growth in the key areas of data, emerging markets and enterprise … 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.’

United Kingdom, Vodafone Group