Vodafone meets FY outlook, sees EBITDA growth slowing in new year

Tuesday 15 May 2018 | 08:29 CET | News

Vodafone said it expects a slowdown in underlying profit growth this year, after meeting its outlook for the fiscal year to March 2018. Last year, organic adjusted EBITDA grew 11.8 percent to EUR 14.74 billion, ahead of its outlook for around 10 percent growth, while this year growth will slow to 1-5 percent, as the company faces growing competition in key markets such as Spain and Italy. 

The growth last year was driven by cost efficiencies, and Vodafone said the efforts will continue this year, as part of the ongoing 'Fit for Growth' programme and the 'Digital Vodafone' plan to improve customer service and marketing. The outlook excludes the impact of UK handset financing in both years, and the significant benefit last year from regulatory settlements in the UK and a legal settlement in Germany. This implies an adjusted EBITDA range of EUR 14.15-14.65 billion for the current year. 

Free cash flow, excluding spectrum costs, is expected to exceed EUR 5.2 billion in the year to March 2019, after EUR 5.6 billion last year. This is based on capital expenditure continuing as a mid-teens percentage of revenue, excluding the Gigabit Investment Plan in Germany. The German plan is expected to ramp up during the year, spending an extra EUR 2 billion over four years and reducing free cash flow by around EUR 100-200 million.

Revenues lower, dividend higher

In the year to March 2018, Vodafone reported revenues down 2.2 percent to EUR 46.57 billion, due to the spin-off of Vodafone Netherlands and negative currency effects. On an organic basis, service revenue rose 1.6 percent and increased 1.4 percent in the final quarter of the year. In Q4, the growth was led by Turkey (+14.3%), Egypt (+7.8%) and Germany (+5.9%), offsetting continued lower revenues in the UK and a slowdown in Spain. 

The results exclude Vodafone India, which is considered a discontinued activity and where service revenues fell 18.7 percent last year due to new competition from Jio. Vodafone said it expects to complete the merger of the Indian operations with Idea Cellular in June. 

Annual adjusted EBIT increased by 21.6 percent to EUR 4.8 billion, driven by strong adjusted EBITDA growth and lower depreciation and amortisation expenses. A lower tax rate and drop in financing charges helped adjusted earnings per share from continued operations increase 44.2 percent to 11.59 eurocents. Vodafone proposed a final dividend of 10.23 eurocents, up 2.0 percent from a year ago, and said it aims to continue to grow the pay-out. 

Vodafone ended the year with 273.43 million mobile customers, excluding India. The total fell by around 3.43 million from the end of December, due mainly to losses in Egypt as well as fewer customers in most European markets. The fixed broadband base reached 16.07 million at the end of March, up by 332,000 from three months earlier. 

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Categories: General
Companies: Vodafone
Countries: World
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