Vodafone reveals weaker-than-expected performance
Performance in the last quarter was weaker than expected at Vodafone (VOD).
The world's largest mobile phone operator said group service revenues grew by 0.9% on the year in the final three months of 2011.
In organic terms they reached £10.61 billion and came in substantially below the 1.1% rise expected by analysts.
Drilling down to regional revenues, Europe saw a drop of 1.7% to £7.4 billion, although there was more positive news from the Africa, Middle East and Asia Pacific region which jumped 7.6% to £3.61 billion.
Although there was modest sales growth in northern Europe, particularly the UK, Germany and the Netherlands, a slump dented revenues in Italy - down 4.9% - and Spain, which the company put down to economic problems.
The picture was encouraging in emerging markets with revenue climbing 23% in Turkey and 20% in India.
Vodafone's chief executive, Vittorio Colao, said the group was continuing to make progress in the key strategic areas of data, enterprise and emerging markets.
"Despite the further deterioration of the southern European economic environment during the quarter, our broad geographic mix is delivering a resilient overall performance. Our improved value perception, strong cash generation and healthy balance sheet give us confidence that we can continue to execute well," he commented.
Despite the less-than-glowing results, the company reiterated previous guidance for adjusted operating profits and free cash flow.
Adjusted operating profit for the current financial year is expected to be in the £11.4 - £11.8 billion range communicated in November 2011. The firm also expects its full-year earnings before interest, tax, depreciation and amortisation (EBITDA) margin to decline at a lower rate than that experienced in the prior financial year.
Free cash flow is still expected to be in the range of £6.0 to £6.5 billion, excluding the £2.8 billion dividend received from Verizon Wireless in January 2012.
Thursday's results did not deter analysts at Numis, who maintained a 'buy' recommendation and a 230p target price on the stock.
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