LONDON (Reuters) – Mobile operator Vodafone raised its free cash flow forecast on Tuesday after reporting better-than-expected profit growth in the first half of the year, driven by a good performance in Germany, its largest market.
Vodafone stock, which has fallen 15% since the start of its fiscal year, has risen to 6%.
The British company raised the floor of its annual profit forecast to 15.2 billion euros ($ 17.3 billion) from 15.0 billion euros, the remaining ceiling at 15.4 billion, and increased its free cash flow target of 100 million euros to at least 5.3 billion euros. euros.
Managing Director Nick Read said Vodafone had “a strong business momentum”.
“Our strengthened performance in Africa and Europe puts us on track to be at the top of our forecasts for this year, as well as firmly in our medium-term financial ambitions,” he said.
Vodafone said its total revenue increased 5% to 22.5 billion euros in the six months ended September, thanks to growth in service revenues in Europe and Africa and a handset sales resumed following the COVID-19 disruption the previous year.
Current operating income increased 6.5% to € 7.6 billion
Organic service revenues increased in both Germany and Britain, but declined in Italy and declined in Spain after growth in the first quarter evaporated in the second.
Read said consolidation was needed in markets such as Spain, Italy and Portugal, where “all players were suffering”.
“I really think the consolidation from five to four makes a lot of sense without any punitive recourse,” he told reporters, adding that the company has been talking to the European Commission and member states to this end as well as ‘with Great Britain and the African countries where it operates.
He also said he was looking for industrial merger opportunities for his Vantage Towers infrastructure spin-out, which would result in the sale of his controlling stake.
Analysts are likely to push the forecast higher. They expected Vodafone to report a profit of 15.2 billion euros this year and generate cash flow of 5.23 billion euros, according to a consensus established by the company.
(Reporting by Paul Sandle; Editing by Kate Holton and Emelia Sithole-Matarise)
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