Revs, profits fall but Vodafone claims H1 highlights improved trends

After chief executive Margherita Della Valle’s opinion that its 2023 financial year had “not been good enough” – prompting 11,000 job cuts in Europe and changes to regain competitiveness though simplifying the organisation and cutting out complexity – Vodafone Group has announced the first half of its 2024 fiscal year has made initial strategic progress on its turnaround plan, with improved revenue trends.

For the six months ended 30 September 2023, Vodafone Group reported total revenue of €21.9bn, declining 4.3% year on year (YoY) driven by adverse foreign exchange rate movements and the disposal of Vantage Towers, Vodafone Hungary and Vodafone Ghana in the prior financial year.

On a reported basis, adjusted EBITDAaL decreased to €6.4bn, down from FY23 H1’s €7.2bn, with organic growth of 0.3% despite a significant increase in energy costs. Adjusted EBITDAaL margin was 0.8 percentage points lower year-on-year at 29.1%.

Operating profit for the half year plummeted 44.2% compared with the same period a year earlier to €1.7bn and the Group made a loss for the period of €0.2bn, after recording a €1.2bn profit at the end of H1 in FY23. Again, this was said to have reflected the disposal of Vantage Towers, Vodafone Hungary and Vodafone Ghana in the prior financial year, plus adverse foreign exchange rate movements and lower share of results of equity accounted associates and joint ventures in the current year. The company calculated that basic loss per share was 1.28 eurocents, compared to basic earnings per share of 3.37 eurocents1 in the prior year.

In the previous year, of particular note was the disappointing performance at European subsidiaries. In May 2023, Vodafone set out a new roadmap based on the need to change and focus on three priorities of customers, simplicity and growth. For the first six months of fiscal 2024, Vodafone saw group service revenue growth of 4.2% in the first half of FY24, with both Europe and Arica growing. Service revenue growth in Turkey was 79.3% driven by higher inflation. Group service revenue growth excluding Turkey was 2.3%. Germany returned to growth in H1 2024, with service revenue in Q2 FY24 of 1.1%.

Vodafone Business service revenue continued to accelerate at 4.4% in H1 FY24, with growth across all customer segments and markets, except Spain. The company has just entered a binding agreement with European investment house Zegona for the acquisition of 100% of Vodafone Spain in a deal valued at €5bn.

Assessing performance in the first half year, Della Valle said the company’s transformation was progressing. “During the first half of the year, we have delivered improved revenue growth in nearly all of our markets and have returned to growth in Germany in the second quarter,” she said.

“Our focus on customers and simplifying our business is beginning to bear fruit, although much more needs to be done. We have also announced transactions to strengthen our position in the UK and exit the challenging Spanish market in order to rightsize our portfolio for growth.”