Vodafone Operating Profit Rises; Market Likes Dividend
Shares of U.K. telecom heavyweight Vodafone rose more than 2% Tuesday, as a bigger-than-expected increase in the company's dividend overcame disappointment in full-year operating profit growth and cautious guidance for fiscal 2008 results.
Vodafone reported a net loss of 4.8 billion pounds ($9.5 billion) for the year ended March, narrowing from 17.23 billion pounds in the same period a year ago, with the company citing strength in emerging markets.
Earnings before interest, taxation depreciation and amortization (EBITDA) for the period rose to 11.96 billion pounds, up 1.6% from the year ago. Adjusted earnings per share rose 11.4% from fiscal 2006 to 11.26 pence per share.
Annual revenue rose 6% to 31.1 billion pounds.
Analysts surveyed by Reuters predicted EBITDA of 12.13 billion pounds and revenue of 31.39 billion pounds.
But Vodafone said the dividend paid out to shareholders rose 11.4% to 6.76 pence a share.
"There are few stocks in the FTSE-100 (apart from BT) which offer such attractive dividend growth coupled with a high yield," Seymour Pierce analyst Jim McCafferty said, according to Dow Jones.
Looking ahead, the company said it expects "market conditions to remain challenging for the year ahead in Europe." Vodafone predicted revenue of 33.3 billion pounds to 34.1 billion pounds for the year ending 2008, with adjusted operating profit of 9.3 billion to 9.8 billion.
"I think the outlook is perhaps not quite as exciting as the market would have hoped, clearly the European situation is very difficult," Martin Mabbutt, European telecom analyst at Nomura, told "Squawk Box Europe."
"It's all about Vodafone looking outside of its existing market, clearly emerging markets is a focus of growth, and really developing new revenue streams from its existing customer base," Mabbutt said.