Vodafone First Half Profits Drop 35% on Turkish Write-Down

Vodafone has reported a drop of 35% in net profit for the first half of this year to £2.17 billion (US$3.2 billion), from £3.33 billion (US$5.25 billion) a year ago. The loss included an impairment loss of £1.7 billion (US$2.7 billion) on its Turkish network. First half operating profits before taxes rose by just over 10% to £5.8 billion (US$9.05 billion) on revenues up by 17% to £19.9 billion.

Vittorio Colao, Chief Executive, commented: "The first half results reflect a solid overall performance in a challenging operating and a weaker macro economic environment."

He also confirmed the earlier reports that the company is looking to strip out around £1 billion ($1.56 billion) a year in cost savings by 2011.

The Group now expects capitalised fixed asset additions to be in the range of £5.2 billion to £5.7 billion, slightly lower than previously envisaged, reflecting cost control as a consequence of lower expected revenue. Capital intensity for the total of the Europe region and common functions is still expected to be around 10%, with significant investment in growth being maintained in India.

The company cut its full year expectations though from between £39.9-£40.7 billion to £38.8-£39.7 billion (US$61-$62 billion), and downgraded its adjusted operating profit forecast from£ 11 billion to £11.5 billion.

The updated outlook includes the impact of the GroupÃ's acquisition of stakes in Ghana, Qatar and Poland and by SFR of Neuf Cegetel. The outlook does not reflect the additional 15% stake in Vodacom, as this is not expected to be material in the 2009 financial year, or Verizon WirelessÃ' pending acquisition of Alltel

Posted to the site on 11th November 2008