Vodafone Group plans to accelerate its plans to reduce operating costs amid an expected further decline in profits this year. The mobile operator reported net profit for the fiscal year to March 2009 of GBP 3.08 billion, down 54.4 percent from a year earlier due to GBP 5.9 billion in impairment charges to write down the value of its poorly performing activities in Spain, Turkey and Ghana.
Operating profit, excluding the one-time charges, rose 16.7 percent to GBP 11.76 billion, helped by the weaker pound. Annual revenues rose 15.6 percent to GBP 41.02 billion, thanks to positive currency effects and acquisitions, but were down 0.4 percent on an organic basis due to regulatory price cuts and the slowing economy. The proportionate customer base grew to 302.61 million, from 288.99 million in December and 260.49 million a year earlier.
For this year, Vodafone expects results in Europe to remain under pressure while Africa and Asia will also see a slowdown in growth. The company forecast adjusted operating flat to lower in the fiscal year to March 2010, at GBP 11.0-11.8 billion. Vodafone plans to accelerate its previously announced cost-reduction plan in order to achieve 65 percent of the planned GBP 1 billion in savings in the current year
As a result, the company expects the EBITDA margin to fall at a slower rate than the 1.8 point drop seen last year. Vodafone aims to boost free cash flow this year to GBP 6.0-6.5 billion from GBP 5.7 billion last year, while capex is estimated at similar levels to last year's GBP 5.91 billion, after adjusting for exchange rates.
In its main market Europe, Vodafone posted annual revenues up 13.6 percent to GBP 29.63 billion, thanks to the weaker pound versus the euro. Organic revenues fell 2.1 percent, due to both lower equipment sales and a 1.7 percent drop in services revenues. In Q4, service revenues fell 3.3 percent.
Spain showed the biggest annual decline, with organic revenues down 4.9 percent, while Germany fell 2.5 percent due to growing use of the SuperFlat tariffs there. Full-year EBITDA rose 7.6 percent to GBP 10.42 billion, but was down 7.0 percent on an organic basis. The UK led the profit decline at a drop of 15.3 percent, hut by higher customer retention costs as the 18-month contracts introduced in 2006 came to an end.
In Africa and Central Europe, revenues rose 11.2 percent to GBP 5.50 billion. Organic sales were up 3.9 percent, as a strong performance at Vodacom offset weakness in Turkey and Romania. EBITDA was up 1.3 percent to GBP 1.69 billion, but fell 2.4 percent on an organic basis due to network investments, spending on the turnaround plan in Turkey and intense competition in Romania.
Finally, in Asia Pacific and the Middle East, Vodafone increased sales 32.3 percent to GBP 5.82 billion and EBITDA rose 17.8 percent to GBP 1.74 billion, mainly due to the takeover in India as well as subscriber growth. On a pro forma basis, revenues rose 19 percent and EBITDA was up 6 percent. However the EBITDA margin declined to 29.9 percent due to weakness in Australia.