Vodafone swings to loss after €4.5bn impairment blow
Vodafone has swung to a loss after recording a €4.5bn (£3.8bn) impairment hit amid the continued poor performance of its German business.
The telecoms giant posted a pre-tax loss of €1.4bn for the year to end March, compared to a profit of €1.6bn the previous year.
Vodafone said the impairment charges “reflect management’s latest assessment of likely trading and economic conditions in the five-year business plan.”
The company said the current and future expected earnings performance of Germany had been lowered. “The key driver of both changes is materially higher competitive density in the mobile market…impacting our expectations of future cash generation,” the firm said.
Total revenue in Germany fell 6 per cent over the period to €12.2bn, while pre-tax earnings slumped 12.6 per cent to €4.4bn.
The company’s performance fared better in the UK, with sales nudging up 3.4 per cent to €7.3bn and pre-tax earnings rising 10.7 per cent to €1.6bn. Overall global revenues rose 2 per cent to €37.4bn.
Vodafone shares fell 0.6 per cent in early trade on Tuesday. The stock is up 4.7 per cent since the start of the year.
Vodafone’s turnaround plan
The results mark the end of a major two-year transformation of the business under CEO Margherita Della Valle, during which the company sold its Italian and Spanish operations and won clearance for its huge £15bn takeover of UK rival Three, which is due to be concluded later this year.
“Since I set out my plans to transform Vodafone two years ago, Vodafone has changed,” Della Valle said.
“We have delivered strong operational improvements across the business. Clearly there is much more to do, but this period of transition has repositioned Vodafone for multi-year growth.”
Vodafone’s troubles in Germany have coincided with the surprise departure of its German CFO after less than two years in the role.
Luka Mucic, who joined the telco’s board in September 2023, said he plans to leave “no later than” the spring of 2026, a move that would make him the firm’s shortest-serving CFO in its history.
Mucic, who had been paid a salary of £760,000, said he made the move to become the new CEO of Vonovia, a German property company and a constituent of the DAX 40 index.
The company’s German operations have also been hit by a law change to TV contracting in multi-dwelling units (MDU) which came into effect in the country in July 2024 and saw the firm lose more than four million customers.
Vodafone said the loss, which accounted for around half its total MDU customer base, was in line with its initial expectations.
Mucic told reporters on Tuesday: “We originally felt that we would be able to counter [the fall in MDU customers] with an improved an accelerating performance in mobile but due to the heightened competitive intensity in the market, that did not come to full fruition.
“We have decided consciously not to save against that but actually lean into the challenge and continue to stimulate our turnaround and transformation.”