Vodafone Shares Fall After Fiscal Year 2021 Adjusted Earnings Missed Expectations -- Update

--Vodafone reported adjusted earnings for fiscal 2021 below consensus forecasts, sending shares lower

--The company has been hit by coronavirus impact on roaming revenue and currency movements

--Vodafone expects to drive growth in revenue and cash flow in the medium term

By Adria Calatayud

Shares in Vodafone Group PLC fell Tuesday after it reported adjusted earnings for fiscal 2021 that missed analysts' expectations and said it expects to drive returns in the medium term through efficiency and growth in revenue and cash flow.

The U.K. telecommunications group, which has been hit by the effects of the coronavirus pandemic on roaming and visitor revenue as well as by foreign-exchange movements, has tried to streamline its operations through the listing of its European infrastructure arm, Vantage Towers AG, and the sale of noncore assets. The company said it has delivered on the first of its strategy to reshape itself to focus on Europe and Africa.

Vodafone made a pretax profit for the year to March 31 of 4.4 billion euros ($5.35 billion) compared with EUR795 million for fiscal 2020. The company swung to a net profit of EUR112 million from a net loss of EUR920 million a year earlier.

Adjusted earnings before interest, taxes, depreciation and amortization--the company's preferred metric, which strips out exceptional and other one-off items--for the year declined 1.2% to EUR14.39 billion.

Revenue for the year fell 2.6% to EUR43.81 billion.

Analysts expected Vodafone to report an adjusted Ebitda of EUR14.54 billion on revenue of EUR43.64 billion, according to a company-collated consensus based on estimates by 16 analysts.

Shares at 0721 GMT were down 6.2% at 132.92 pence ($1.88).

The company said service revenue returned to growth in the second half of the year and that it ended the year with accelerating service revenue growth across the business, with a particularly positive performance in Germany, its largest market.

Vodafone said it expects adjusted Ebitda to be between EUR15.0 billion and EUR15.4 billion this year, with adjusted free cash flow anticipated to be at least EUR5.2 billion.

The company's adjusted Ebitda guidance for fiscal 2022 is in line with consensus expectations of EUR15.22 billion, but analysts expected free cash flow before spectrum costs to be EUR5.44 billion in the current year.

"The increased demand for our services supports our ambition to grow revenues and cash flow over the medium-term," Vodafone Chief Executive Nick Read said.

"We remain fully focused on driving shareholder returns through deleveraging, improving our return on capital, and a firm commitment to our dividend," Mr. Read said.

The board maintained its full-year dividend at 9 European cents a share, flat on year.

Write to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

May 18, 2021 03:55 ET (07:55 GMT)

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