Vodafone reported a drop in results for its fiscal year to March, but said underlying trends in revenue and profit were improving. Group revenue for the year fell 3.0 percent to GBP 41.0 billion, hurt by foreign exchange rate movements, and EBITDA was down 2.5 percent to GBP 11.6 billion.
On an organic basis, service revenue returned to growth of 1.5 percent, with a gradual improvement over the year to growth of 2.5 percent in the final quarter. Europe recovered to organic service revenue growth of 0.5 percent in Q4, led by Germany and Italy and a positive effect from the leap year, and growth in Africa, Middle East and Asia Pacific (AMAP) accelerated to 8.1 percent in the quarter. EBITDA also accelerated in the second half of the year, to growth of 3.6 percent, thanks to the better revenue performance and cost controls, including greater-than-anticipated synergies from the takeover of Ono in Spain, Vodafone said.
Adjusted operating profit fell by 11.1 percent to GBP 3.1 billion for the year, due to the increase in depreciation and amortisation resulting from the Project Spring investment programme. Reported operating profit fell to GBP 1.4 billion from GBP 2.0 billion a year ago, impacted by a goodwill impairment for weak market conditions in Romania of GBP 0.45 billion. The net result was a loss of GBP 3.8 billion due to charges for revaluing investments. Free cash flow of GBP 1.0 billion for the year met the company's outlook for a positive result, as capital expenditure fell 6.5 percent to GBP 8.6 billion.
CEO Vittorio Colao said the operator had a strong year, with the first organic growth in both revenue and EBITDA since 2008. The investments from Project Spring in the network and customer service should support further improvement going forward, he said.
For the current year, when Vodafone plans to switch to reporting in euros, Vodafone forecast an improvement in free cash flow to at least EUR 4 billion (GBP 3.2 billion), which should support further growth in dividends. Organic EBITDA is expected to grow 3-6 percent to EUR 15.7-16.2 billion (GBP 12.4-12.8 billion). After largely completing Project Spring, capex will drop to the mid teens as a percentage of annual revenue.
Vodafone ended the year with 462.284 million customers, after adding 1.293 million in the final quarter. This included 46.8 million 4G users, which helped drive a 71 percent increase in data traffic over the year. The number of fixed broadband customers increased by 416,000 in the quarter to 13.373 million at the end of March. The operator said it was also outperforming the enterprise market, with organic growth of 2.1 percent in the business market last year.
