Proactive Investors - Vodafone Group PLC (LON:VOD) reported a 75% decline in profits for the past year, as expected, but kept its dividend flat on the previous year.
Chief executive Margherita Della Valle, a year after setting out turnaround plans that left City analysts cold, said the telecoms colossus was “now delivering growth in all of our markets across Europe and Africa”, with better organic service revenue than expected.
Saying “much more still needs to be done”, she promised a step-up in investment in customer experience, improvements to the performance in Germany and further streamlining of operations, with the UK government having recently approved the merger with Three.
This "right-sizing" of the group means the board has decided on a new "rebased" dividend from the current year onwards, targeting a moe sustainable dividend of 4.5 cents per share for this year "with an ambition to grow it over time".
To sweeten the pill, share buybacks of up to €2.0 billion of proceeds from the sale of Vodafone Spain were declared, with an opportunity for further share buybacks of up to €2.0 billion anticipated following the completion of the sale of Vodafone Italy, which is expected in the first half of next year.
For the past year to March, Vodafone reported revenue of €36.7 billion, down 2.5% over the year following the sale of Vantage Towers, Vodafone Hungary and Vodafone Ghana the previous year.
Organic service revenue growth of 6.3% and organic earnings growth of 2.2% were both better than expected.
Operating profit came to €3.7 billion versus €14.5 billion last time, which was boosted by an €8.6 billion gain from the towers disposal.
Underlying profits on an EBITDAaL basis (earnings before interest, taxes, depreciation, amortization, and adjusted loss) fell 11.3% to €11 billion, which was exactly in line with the average analyst forecast.
Free cash flow came in at €2.6 billion, which was a bit better than expected, but net debt of €33.2 billion was slightly higher than City estimates.
The dividend was maintained at 9 euro cents per share.
For the new financial year, forward guidance was given for adjusted EBITDAaL to remain around €11 billion and adjusted free cash flow of “at least €2.4 billion”.