VODAFONE said yesterday that it plans to accelerate its £1bn cost cutting programme after the phone giant’s full year profits were hit by writedowns of £5.9bn.
“Our £1bn cost-cutting reduction programme is ahead of plan and we continue to explore further ways to reduce costs,” 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.
The world’s largest mobile telephone company reported a pre-tax profit of £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.
Additions to the expected £1.7bn writedown included £3.4bn against Vodafone’s Spanish business, which has been hit by the nation’s economic downturn. But Colao conceded that all of the company’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.
Full year revenue grew by 15.6 per cent to £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.
But the firm’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.
“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,” Colao said.
Vodafone said operating conditions would be challenging in Europe and central Europe in 2009/10 and forecast adjusted operating profit to be between £11bn-11.8bn and for free cash flow to grow to £6bn-6.5bn.
A YEAR AT VODAFONE
Chief executive Arun Sarin steps down and is replaced by his deputy, Vittorio Colao.
Buys a 70 per cent stake in Ghana Telecom; cuts revenue outlook due to problems in Spain; announces £1bn buyback programme after stock crashes 14 per cent.
Takes controlling stake in South African mobile operator, Vodacom; cuts full-year revenue outlook for second time in four months and announces £1bn in cost cuts.
An Indian court dismisses a petition against a $2bn tax bill for the 2007 purchase of an Indian firm.
Announces merger of Australian businesses with Hutchison Whampoa; says will cut 500 jobs in the UK.
Agrees four-country infrastructure sharing deal with Telefonica.
Ups stake in Vodacom to 65 per cent; says will accelerate cost cutting and announces £5.9bn impairment charge.