Vodafone to accelerate cost cutting

VODAFONE said yesterday that it plans to accelerate its &pound;1bn cost cutting programme after the phone giant&rsquo;s full year profits were hit by writedowns of &pound;5.9bn.<br /><br />&ldquo;Our &pound;1bn cost-cutting reduction programme is ahead of plan and we continue to explore further ways to reduce costs,&rdquo; said chief executive Vittoria Colao, adding that the company now expects 65 per cent of the programme to be completed in 2010, up from 50 per cent quoted previously.<br /><br />The world&rsquo;s largest mobile telephone company reported a pre-tax profit of &pound;4.2bn for the year to March 2009, down 53.5 per cent from the previous year, and forecast profit to be flat for the coming year.<br /><br />Additions to the expected &pound;1.7bn writedown included &pound;3.4bn against Vodafone&rsquo;s Spanish business, which has been hit by the nation&rsquo;s economic downturn. But Colao conceded that all of the company&rsquo;s markets had been hit by the recession, as businesses axed staff and consumers made fewer calls and sent less texts. Roaming revenues were also hit by cut-backs in travel and caps introduced by the European Union.<br /><br />Full year revenue grew by 15.6 per cent to &pound;41bn, though the increase was mostly due to a favourable exchange rate with the euro. At constant currency rates, revenue grew by just 1.3 per cent.<br /><br />But the firm&rsquo;s global footprint served it well, with a good performance in India and Africa. It also saw a 44 per cent rise in data charges from customers surfing the internet.<br /><br />&ldquo;These results demonstrate the impact of the early actions we took to address the current economic conditions and highlight the benefits of our geographic diversity,&rdquo; Colao said.<br /><br />Vodafone said operating conditions would be challenging in Europe and central Europe in 2009/10 and forecast adjusted operating profit to be between &pound;11bn-11.8bn and for free cash flow to grow to &pound;6bn-6.5bn.<br /><br /><strong>A YEAR AT VODAFONE<br /></strong><br /><strong>May 2008<br /></strong>Chief executive Arun Sarin steps down and is replaced by his deputy, Vittorio Colao.<br /><br /> <strong>July 2008</strong><br />Buys a 70 per cent stake in Ghana Telecom; cuts revenue outlook due to problems in Spain; announces &pound;1bn buyback programme after stock crashes 14 per cent.<br /><br /><strong>November 2008</strong><br />Takes controlling stake in South African mobile operator, Vodacom; cuts full-year revenue outlook for second time in four months and announces &pound;1bn in cost cuts.<br /><br /><strong>December 2008</strong><br />An Indian court dismisses a petition against a $2bn tax bill for the 2007 purchase of an Indian firm.<br /><br /><strong>February 2009</strong><br />Announces merger of Australian businesses with Hutchison Whampoa; says will cut 500 jobs in the UK.<br /><br /><strong>March 2009</strong><br />Agrees four-country infrastructure sharing deal with Telefonica.<br /><br /><strong>May 2009</strong><br />Ups stake in Vodacom to 65 per cent; says will accelerate cost cutting and announces &pound;5.9bn impairment charge. <!--EndFragment-->