Vodafone aims for upper end of guidance after strong first quarter

Vodafone Group PLC ( LSE:VOD ) said it expects to reach the upper end of its upgraded annual guidance after getting off to a strong start to its financial year. Organic service revenue increased 5.2% in the first quarter, with growth recorded across every segment, and inching up from 5.1% in the final quarter of the past year. Reported service revenue rose 9.8% to €8.6 billion, while total revenue climbed 9.7% to €10.3 billion, helped by the merger of its UK business with Three. Underlying profits (EBITDAaL) increased 6.7% to €2.9 billion, or 6.2% on an organic basis, as margins improved by 0.6 percentage points to 28.5%, partly reflecting the higher service revenue. After returning to growth last year, Germany delivered organic service revenue growth of 1.2% as stronger wholesale and fixed-line revenue offset continued competition in mobile. UK growth improved to 0.6% from a 0.2% decline in the preceding quarter, supported by consumer broadband and a return to growth for fixed-line business services. Africa remained the strongest region, with organic service revenue rising 12.6%. Vodafone upgraded its full-year guidance to adjusted EBITDAaL of €13-13.3 billion and adjusted free cash flow of €2.6 billion to €2.9 billion. This follows the consolidation of East African network Safaricom, following the upping of its stake to 55% Chief executive Margherita Della Valle said Vodafone had made “a good start to this financial year”. She said earnings were boosted by the new phase of multi-year cost-cutting initiatives announced in May. "And after our good start to the year, we are expecting to deliver the upper end of the new group ranges." Continue reading