Vodafone reports 2% rise in annual profit after stronger final quarter

By Paul Sandle

LONDON (Reuters) -Vodafone reported on Tuesday a 2.2% rise in organic earnings for 2024, meeting market forecasts, after it returned to top-line growth in the final quarter helped by gains in Britain and Germany.

Chief Executive Margherita Della Valle said Vodafone was delivering growth in all of its markets across Africa and Europe, including its largest Germany, after her decision to sell its struggling operations in Spain and Italy.

As well as the disposals, Delle Valle has simplified Vodafone, including announcing 11,000 job cuts, since she permanently took the top job in April 2023.

“We have a clear path ahead and we’re confident in our plan,” she told reporters.

Investment in customer experience will be stepped up, she said, and the company’s underlying performance in Germany would improve.

Shares in Vodafone, which have fallen 22% in the last 12 months, rose 3.5% in early deals to 72.5 pence.

The British company posted core earnings of 11.02 billion euros ($11.89 billion), in line with forecasts, and adjusted free cash flow of 2.60 billion euros, ahead of market expectations of 2.44 billion euros for the year to end-March.

When it announced the Italian deal in March, Vodafone said it would halve its dividend to 4.5 euro cents a share for the year that started in April.

On Tuesday it said it expected core earnings to be broadly flat this year, while free cash flow would be at least 2.4 billion euros, slightly ahead of forecasts.

Germany returned to growth with service revenue increasing by 0.2% for the full year and 0.6% for the fourth quarter, the company said, but adjusted core earnings dropped by 5.8% due to higher energy costs.

Vodafone has been hit by the end of bulk TV contracting in apartment blocks in Germany and it said it expected to lose about half of its 8.5 million households that are affected by the change.

Once the market has stabilised later this year, Delle Valle said Germany would return to being an “important growth engine” in the financial year starting next April.

($1 = 0.9272 euros)

(Reporting by Paul Sandle; Editing by Kate Holton and Susan Fenton)