Vodafone Group reported a small rise in annual adjusted profit, in line with its outlook, and forecast further growth in the current financial year. Adjusted operating profit for the year to 31 March rose 3.7 percent to GBP 11.96 billion, helped by a strong contribution from its stake in Verizon Wireless, and the mobile operator expects this to grow this year to GBP 12.0-12.8 billion.
Revenues were still down 4.2 percent in the past year to GBP 44.45 billion. In the most recent quarter to March, organic service revenues fell 4.2 percent, including a 2.9 percent fall in North and Central Europe and 14.8 percent drop in Southern Europe, while the activities in Asia, Africa and Australia grew by 2.6 percent.
Net profit for the full year plunged to GBP 673 million from GBP 7.00 billion a year earlier, due to GBP 7.7 billion in impairment charges for the slowdown at its operations in Italy and Spain, including GBP 1.8 billion in the second half of the year.
Free cash flow fell 8.1 percent to GBP 5.61 billion, but Vodafone increased its dividend 7 percent to 10.19 pence per share. Cash flow in the current year is expected to reach GBP 7.0 billion, including 2.1 billion from Verizon Wireless in June, which will remain in the company for investment, rather than go to shareholders. Capital expenditure is expected stable at constant currency rates, after GBP 6.27 billion in the past fiscal year. Spending will focus on expanding the data network, with a coverage target across the operator's five major European markets of 80 percent 3G at 42Mbps and 40 percent with LTE by March 2015.
Vodafone said it expects revenues to remain under pressure this year, particularly in Europe due to the difficult economic environment. Cuts to termination rates alone will take around 2 points off service revenue growth. This should be offset somewhat by growth in markets such as India, Africa and the US, and expansion in enterprise services, as well as projected cost savings of GBP 300 million from further streamlining the organisation. Altogether, the company expects a small decline in the adjusted EBITDA margin this year.
The company ended March with 403.875 million customers, excluding its stake in Verizon Wireless, up from 403.313 million three months earlier and down from 404.691 million in March 2012. Vodafone said it had already signed up over 4.1 million customers for its Red plans by early May, achieving strong net promoter scores for the new offers. The unlimited plans have resulted in less ARPU dilution than anticipated, Vodafone said. The operator targets over 10 million Red subscribers by March 2014.
The group's fixed-line base ended the year at 6.51 million, up from 6.27 million at the end of December. Vodafone said it plans to expand more in next-generation broadband services in major European markets, in order to compete with the growing number of cable and other operators moving into mobile and unified offerings. This will include wholesale agreements, deploying its own fibre and potentially acquisitions. In the enterprise market, the group had over 32 million mobile customers at year-end, and the business segment accounted for over 27 percent of service revenue.
