Vodafone cuts full-year expectations amid European hyperinflation
Newbury-based telecoms giant Vodafone has scaled back its full-year expectations, pointing to spiralling costs as a result of hyperinflation in Europe.
Shares in the company dropped more than 7 per cent yesterday (15 November), after the group reduced its full year profit guidance to €15-15.2 billion from €15-15.5 billion.
Despite seeing revenues grow by 2 per cent to €22.9 billion, a prior year legal settlement in Italy and commercial underperformance in Germany has seen the Group’s adjusted EBITDA-AL decline by 2.6 per cent to €7.2 billion.
While Vodafone saw a 12 per cent increase in its operating profit, bringing it to €2.9 billion, working capital movements and higher tax payments has seen its cash inflow from operating activities decrease by 2.7 per cent to €6.3 billion.
In response to the difficult macroeconomic climate, Vodafone has said its current action plan includes both price initiatives and an extension of its ongoing efficiency programme. So far, the company has implemented price initiatives in 12 of its 13 European markets, in the form of contractual price increases, reduced promotional discounts and new ARPU accretive product portfolios.
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Meanwhile, Vodafone hopes the extension of its efficiency programme, which sees it streamlining and simplifying its group structure and accelerating its operational digitisation, will generate more than €1 billion of additional costs saving by financial year 26.
Nick Read, Vodafone’s chief executive, said: In the context of a challenging macroeconomic environment, we are delivering a resilient performance this year, alongside making good progress with our operational and portfolio priorities.
We are taking a number of steps to mitigate the economic backdrop of high energy costs and rising inflation. These include taking pricing action across Europe, whilst at the same time supporting our most vulnerable customers and driving energy efficiency measures across the business.
We are also announcing today a new cost savings target of €1+ billion focused on streamlining and further simplifying the Group. We are confident that the ongoing delivery of our organic strategy and portfolio actions will underpin long-term growth and create value for shareholders."
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Featured image: iStock
