ii view: can Vodafone shares continue rebound?

Full-year results to 31 March

• Revenue up 8% to €40.5 billion (£34.8 billion)
• Adjusted profit up 3.8% to €11.4 billion
• Net debt of €25.4 billion, up from €22.4 billion a year ago
• Final dividend per share of 2.3625 eurocents per share
• Total dividend for the year 4.6125 eurocents per share, up from last year’s 4.5 eurocents per share

Guidance:

• Expects adjusted profit for the full year ahead of between €11.9-12.2 billion

Chief executive Margherita Della Valle said:  

"After the transformation of the last three years, we are now a simpler company with a stronger growth outlook.

“Our strategic progress has generated good Group service revenue momentum for the year, together with profit and cash flow at the upper end of our guidance range. We returned to top line growth in Germany, alongside strong performances across Africa and in Türkiye. Our early successes from the UK merger integration reinforce our confidence in its potential and I am delighted that we are now gaining full ownership.

“Looking ahead, we will continue to drive continuous improvements across our business, with customer experience as our number one priority. We are now well set for mid-term growth."

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

ii round-up:

Vodafone Group (LSE:VOD) operates both mobile phone and fixed broadband networks.

The company serves around 279 million mobile customers, around 5 million business customers, as well as 18 million fixed broadband users.

For a round-up of these latest results announced on 12 May, please click here.

ii view:

Vodafone today operates across the four divisions of Europe, Africa, Business and Investments. Europe generated three-quarters of adjusted profit during this latest financial year, with Africa the balance. The Investments division holds non-controlling stakes in telecom operators, many of which continue to be sold. Group strategy is focused on improving the customer experience, simplifying the company and growing sales and profits for remaining businesses.

For investors, trading for the group’s biggest German business remains challenging, with comparatives expected to prove tough going forward. A forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap. Previous disposals of its Italian and Spanish businesses now leave the company less geographically diverse, while group net debt of €25.4 billion (£21.8 billion) compares to a stock market value of £25.4 billion.

• Tech Focus: Alphabet, Anthropic, Nvidia, Marvell, Oracle
• Don’t write off UK stocks: two undervalued FTSE 100 shares
• Three advantages retail investors have over the professionals

On the upside, recent full ownership of VodafoneThree leaves the company as the biggest mobile network operator in the UK with over 28 million customers. Cost and capital expenditure savings of €700 million per year are forecast by management by 2030. Double-digit revenue growth for the Africa business pushed adjusted profits up 9% this latest financial year, while growth opportunities continue to be followed, with a recent €30 million stake acquisition strengthening its position in Romania.

In all, and while risks remain, Vodafone’s utility type nature in carrying data across its networks, plus a forecast dividend yield of almost 4% are likely to keep investors interested in this ongoing recovery story.

Positives

• Exposure to Africa
• Shareholder returns supported by sizeable cashflows

Negatives

• Intense competition
• Reduced geographical diversification

The average rating of stock market analysts:

Hold