Inflation could hamper growth, Vodafone says despite revenue rise
Vodafone says inflation could derail its profits despite posting a 5% rise in core earnings in its latest results.
Revenue at Vodafone rose 4% to €45.6 billion and was driven by service revenue growth in Europe and Africa and higher equipment revenue.
Vodafone UK forecasts adjusted EBITDA of between €15 billion and €15.5 billion for the upcoming year and added it would generate €5.3 billion in cash flow, down slightly from €5.4 billion last year.
“The current macroeconomic climate presents specific challenges, particularly inflation, and is likely to impact our financial performance in the year ahead,” the carrier said in a statement.
In recent times the operator has faced pressure from its shareholders to ditch its weaker business segments and strengthen in European markets where competition is increasing.
In a presentation to shareholders, Vodafone said that it was pursuing further deals in Europe as it looks for more consolidation opportunities.
Nick Read, the group’s chief executive has been vocal about consolidating its position in the market and pursuing deals in Europe but remained optimistic with its latest results.
“Our organic growth underpinned a step-change in our return on capital, which improved by 170bps to 7.2%,” he said.
Whilst we are not immune to the macroeconomic challenges in Europe and Africa, we are positioned well to manage them and we expect to deliver a resilient financial performance in the year ahead.
“We are focused on improving the commercial performance in Germany, actively pursuing opportunities with Vantage Towers and strengthening our market positions in Europe.
“These actions, together with the simplification of our portfolio and the ongoing delivery of our organic growth strategy, will create further value for our shareholders.”
Revenue for Vodafone Germany, which makes up 30% of the group, revenue rose by 1.1% to €13.1 billion.
This comes just a few days after it was revealed that Vodafone and Three UK were in talks to merge businesses, with these talks coming as no surprise to analysts in the industry.
The operator also just welcomed investment from Etisalat for a 9.8% stake in the company.