By The Associated Press
Tuesday, November 10, 2009
Telecommunications company Vodafone Group PLC on Tuesday reported a 15 percent increase in first-half net profit, boosted by favorable currency movements, acquisitions and a lower tax rate.
For the six months ending Sept. 30, Vodafone made a net profit of 4.58 billion pounds ($7.6 billion), up from 3.99 billion pounds a year earlier.
Group revenue from continuing operations, however, was down 3 percent, the company said, while reported revenue — which accounts for acquisitions and divestments — rose 9 percent to 21.8 billion pounds.
The company did not break out results for the second quarter.
Vodafone shares fell 1.3 percent to 136.2 pence in early trading on the London Stock Exchange.
"Whilst the results have broadly met analysts' expectations, a continued dependency on cost cutting measures fails to truly inspire," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.
However, Bowman said, "significant market positions, strengths in the emerging market arenas and weighty cashflows underpinning an attractive dividend payment all configure to provide support."
Revenue rose 3 percent in Europe, benefiting from foreign exchange movements; revenue in Africa and Central Europe was up 36 percent, including the acquisition of a controlling stake in South Africa's Vodacom, and revenue in Asia Pacific and Middle East rose 16 percent.
The company's effective tax rate fell from 26.5 percent last year to 21.5 percent in the first half of this year.
In the second quarter Vodafone added 9.7 million mobile customers, raising the total to 303 million.
Service revenue from its Verizon Wireless venture with Verizon Communications Inc. in the United States was up 49 percent to 7.87 billion pounds, boosted by the acquisition of Alltel Corp. in January. Excluding the acquisition, service revenue rose 7.5 percent in Verizon Wireless, in which Vodafone holds a 45 percent stake.
Vodafone confirmed previous guidance of full-year operating profit between 10 billion pounds and 11.8 billion pounds.
The company said it expected to deliver cost cuts of 1 billion pounds a year early and to make additional savings of the same size by 2012.
The company invested 1.78 billion in acquisitions during the first half, including 1.57 billion pounds for an additional 15 percent stake in Vodacom, South Africa's largest mobile phone company, raising its ownership to 65 percent.
In June, Vodafone Australia completed it merger with Hutchison 3G Australia to form a 50/50 joint venture, Vodafone Hutchison Australia Pty Ltd.
Vodafone's report of organic growth are at constant exchange rates, and assume the current stake in Vodacom and the acquisition of Alltel for both years.
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On the Net: http://www.vodafone.com