By Kyle Morris

 

Vodafone Group PLC on Tuesday reported a rise in pretax profit and revenue for the first half of fiscal 2023, but updated its guidance for the full year amid the challenging macroeconomic environment and set a new costs-savings target of more than 1 billion euros ($1.03 billion).

Chief Executive Nick Read said the company is taking a number of steps to mitigate the economic backdrop of high energy costs and rising inflation, including pricing action in Europe.

The U.K.-based telecommunications company said pretax profit for the six months to Sept. 30 was 1.73 billion euros ($1.79 billion) compared with EUR1.28 billion a year prior.

Adjusted earnings before interest, taxes, depreciation and amortization--which strips out exceptional and other one-off items--was EUR7.24 billion from EUR7.57 billion, down 2.6% on an organic basis. The drop was driven by a material prior-year legal settlement and commercial underperformance in Germany, it said.

Revenue for the first half was EUR22.93 billion compared with EUR22.49 billion.

In Germany, total revenue increased 2.2% to EUR6.6 billion, driven by equipment sales, but adjusted Ebitda declined 7.4%, reflecting a fall in service revenue, one-off settlements in the year-prior period and higher customer acquisition costs. On an organic basis, service revenue declined 0.8%, primarily reflecting broadband losses related to the implementation of new sector legislation. Fixed service revenue declined 1.6% and the cable broadband customer base decreased 45,000. The TV customer base fell 165,000.

The company updated its guidance for fiscal 2023 as the global macroeconomic climate has worsened, with energy costs and inflation hitting performance. Vodafone sees adjusted Ebitda of EUR15.0 billion-EUR15.2 billion, from EUR15.0 billion-EUR15.5 billion previously. Adjusted free cash flow is now seen at around EUR5.1 billion, from around EUR5.3 billion.

The board declared an interim dividend of 4.50 European cents for the period, flat on year.

"In the context of a challenging macroeconomic environment, we are delivering a resilient performance this year, alongside making good progress with our operational and portfolio priorities," Mr. Read said.

The company's Vantage Towers transaction helped to deliver monetization and deconsolidation whilst retaining co-control of the strategically important assets, he added.

On Nov. 9, it said that it had agreed to form a new jointly-owned company with Global Infrastructure Partners LLC and KKR & Co. that will own its 81.7% stake in Vantage Towers AG.

 

Write to Kyle Morris at kyle.morris@dowjones.com

 

(END) Dow Jones Newswires

November 15, 2022 03:13 ET (08:13 GMT)

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