Vodafone lowered its outlook for the full year as the telecoms group’s profits slipped in the first half, driven by a weak performance in its largest market Germany.
Shares in the British operator were down 4 per cent on Tuesday after the company adjusted its earnings guidance to €15-€15.2bn, down from €15 -€15.5bn and lowered its free cash flow forecast from €5.3bn to €5.1bn.
Vodafone posted revenue up 2 per cent to €22.9bn but adjusted earnings before interest, tax, depreciation and amortisation down 2.5 per cent to €7.2bn, below consensus estimates of €7.5bn.
In Germany, which accounts for 30 per cent of group revenue, adjusted ebitda fell 7.4 per cent to €2.68bn, in part due to losses in broadband customers and higher customer acquisition costs.
“In the context of a challenging macroeconomic environment, we are delivering a resilient performance this year,” Vodafone’s chief executive, Nick Read, said in a statement.
Read said the company was taking steps to mitigate high energy costs and inflation such as supporting vulnerable customers, taking pricing action in Europe and implementing energy efficiency measures across the business.
The group announced a new cost saving target of €1bn by 2026. It also posted a weak performance in its Italian businesses, with adjusted ebitda falling 17.3 per cent to €759mn.
This April, Vodafone increased prices in line with the annual consumer price index, plus 3.9 per cent, which has helped bolster returns in its UK division and offset a weaker performance in some of its other key markets.
The UK business reported a more than 7 per cent increase in revenues, to €3.4bn, and adjusted ebitda, to €685mn.
Read has been looking to shake up the structure of the company since late last year, pursuing deals in some of the more competitive European markets, including Spain, Italy, the UK and Portugal.
Last week, Vodafone announced it had agreed to sell up to 50 per cent of its €14.8bn mobile phone masts business to a private equity consortium, which would allow it to reduce its debt and potentially pursue deals.
The company is currently in talks with CK Hutchison, owner of rival telecoms group Three, to combine their UK businesses which would create the biggest mobile operator in the country. The deal, which will be scrutinised by the UK’s Competition and Markets Authority, is expected to be announced before the end of the year.