By Paul Sandle
LONDON (Reuters) – Mobile and broadband provider Vodafone said it expected to return to revenue growth in Germany, its largest market, this year, driving an increase in cash flow after it said it met expectations for the year ending in March on Tuesday.
The group, which operates in Europe and Africa, reported adjusted core earnings of 10.9 billion euros ($12 billion), which it said met its 11.0 billion target when hyperinflation in Turkey was taken into account.
Chief Executive Margherita Della Valle has reshaped Vodafone by selling its operations in Spain and Italy and agreeing a merger in Britain, where it will become the mobile market leader when the deal completes in the next few weeks.
But it was hit by a one-off change in German cable TV contract rules for apartment blocks, resulting in a 5% decline in service revenue in the country in the last financial year.
“Looking ahead, we expect to see broad-based momentum across Europe and Africa, and for Germany to return to top-line growth during this year,” she said.
Analysts have applauded Della Valle’s actions, which have reduced the group’s debts and have sharpened its operational performance.
But the market has remained sceptical about Vodafone’s prospects and the shares have declined 6% in the last 12 months to lows last seen in 1997.
They traded broadly flat in early deals on Tuesday.
Service revenue grew 2.8% to 30.8 billion euros, meeting analysts’ expectations, the company said. Adjusted free cash flow came in at 2.5 billion euros, just ahead of expectations.
It said it expected adjusted core earnings of between 11.0 and 11.3 billion euros this year and adjusted free cash flow of 2.6-2.8 billion euros.
($1 = 0.8887 euros)
(Reporting by Paul Sandle; editing by Sarah Young and Tomasz Janowski)
