Vodafone results a mixed bag

Vodafone has reported record profits for the past year ended March 31 despite a further decline in revenues, thanks to the disposal of its 45 per cent stake in Verizon Wireless.

The company saw revenues for the year fall by 1.9 per cent to GBP43.6 billion (US$73.6 billion), while profits rocketed to GBP59.4 billion, thanks largely to a pre-tax gain of GBP45 billion from the Verizon Wireless sale, and the recognition of deferred tax assets of GBP19.3 billion.

The group’s emerging markets businesses have delivered strong organic growth this year. In particular, data usage in emerging markets is really taking off, providing further growth potential for the group. This has however been offset by significant on-going pressures in the European operations, from a combination of a weak macroeconomic environment, regulatory headwinds, and stiff competition.

As a consequence, the company wrote down the value of its subsidiaries in Germany, Spain, Portugal, Czech Republic and Romania by GBP6.6 billion as those markets continued to struggle.

As a result, the underlying EBITDA fell by 5.4 per cent to GBP12.8 billion. The underlying adjusted profit also fell, by 9.4 per cent to GBP7.9 billion.

Vodafone also expects EBITDA to fall this year, ending in the range of GBP11.4 billion to GBP11.9 billion, principally reflecting the impact of network investment and foreign exchange movements.