British-based mobile phone giant Vodafone raised full-year profit and sales forecasts on Tuesday after a strong set of half-year results topped consensus expectations, sending its shares climbing.
Vodafone, the world's largest cell phone group by revenue, nudged up its forecast range for adjusted operating profit to 9.5 billion to 9.9 billion pounds ($19.8-$20.6 billion), from 9.3 billion-9.8 billion and raised revenue targets to 34.5 billion-35.1 billion pounds from 33.3 billion to 34.1 billion.
The company, which has 241 million customers, also lifted free cashflow forecasts by around 10 percent to between 4.4 billion and 4.9 billion pounds on the back of strong emerging markets growth and solid mobile data revenues that supported growth in core European markets.
Pressure had grown on Vodafone to upgrade forecasts after Spain's Telefonica triggered a re-rating of the entire sector with an upbeat four-year outlook and France Telecom raised 2007 cash and margin targets last month.
But with Vodafone's earnings per share of 6.42 pence topping consensus forecasts by around 10 percent, analysts started to rejig their numbers. Its shares climbed 3.57 percent to 188.5 pence by 1215 GMT, the strongest performer on the DJS European Telecoms stocks index.
"Vodafone continues to show good progress on revenue growth, profit conversion and cash flow conversion," said Wesley McCoy, Investment Director at Standard Life Investments, one of Vodafone's largest investors with a 1.7 percent stake.
"It is very encouraging to see increases to their future guidance and after some difficult years, their core Western European businesses appear to have stabilised."
Emerging Markets Shine
Vodafone said strong revenue growth of almost 40 percent from emerging market operations in India -- which contributed its first full quarter -- Turkey, Egypt and South Africa again bolstered pedestrian but solid growth in Europe of two percent.
Vodafone's business in India, where it owns a controlling stake in one of the country's top mobile phone operators, Vodafone Essar, saw revenues rise by 53 percent -- although this missed some forecasts of up to 60 percent growth.