Spain write-offs slash Vodafone's profits

19th May 2009 07:16

Heavy one-off charges, principally in Spain, slashed mobile phone Vodafone's annual profit, though the underlying numbers met forecasts. Group revenue for the year to March rose to £41bn, up 15.6%, and on a pro forma basis by 1.3%. Group adjusted operating profit rose by 16.7% to £11.8bn before impairment charges with underlying profits up by 10.0% to £14.5bn.Pre-tax profits, though, fell more than 50% to £4.2bn from £9bn after a £5.9bn write-down on its operations in Spain and Turkey.Europe revenue rose by 13.6% with outgoing voice usage up 9.4%. Africa and Central Europe revenue growth was 11.2%. Asia Pacific and Middle East revenue grew 32.3%, driven by India. Group data revenue rose by 43.7% to £3bn.Spain's service revenue fell 4.9% with an 8.6% decline in the fourth quarter as soaring unemployment in the country took its toll on the number of foreign workers, who are big users of mobile phones.Lower roaming fees also hit UK revenues as Britons took fewer foreign holidays. Vodafone UK reported a 7.3% decline in call revenue.Overall, margins declined by 1.8 percentage points, one third of which was due to the impact of acquisitions and disposals, foreign exchange and business mix. A growing contribution from Verizon Wireless and foreign currency benefits offset the weaker performance in Europe.For the current year, Vodafone expects adjusted operating profit to fall slightly to a range of £11bn to £11.8bn in what it describes as a challenging environment. Recent revenue trends are assumed to continue and EBITDA margin expected to decline at a slightly slower rate, it added. There was no sales forecast for the 12 months to March 2010. Chief executive Vittorio Colao added the Vodafone has speeded up its cost reduction programme to offset the weaker revenues. It now intends to save £650m by March next year, compared with an earlier forecast of £500m.The dividend for the year rises by 3.5% to 7.7p, less than expected.