Eurozone crisis hits Vodafone profit

London: British mobile phone giant Vodafone reported a 90 per cent plunge in annual net profit on Tuesday after taking a vast impairment charge relating to businesses in debt-laden Eurozone nations Italy and Spain.

Earnings after taxation nosedived to £673 million (Dh3.75 billion) in the group’s financial year to the end of March, compared with £7 billion in 2011-2012, Vodafone said in a results statement.

Group revenues retreated 4.2 per cent to £44.44 billion.

Vodafone’s businesses in Italy and Spain have been hit hard by the impact of the Eurozone sovereign debt crisis.

The company said that it took a second-half hit of £1.8 billion, taking its total impairment charge to £7.7 billion for Italy and Spain.

“We have faced headwinds from a combination of continued tough economic conditions, particularly in Southern Europe, and an adverse European regulatory environment,” said Vodafone chief executive Vittorio Colao in the statement.

He added: “The board remains focused on balancing ongoing shareholder remuneration with the long-term investment needs of the business, and going forward aims at least to maintain the ordinary dividend per share at current levels.”

Vodafone’s full-year shareholder dividend stood at 10.19 pence per share, up seven per cent from the previous year.

The company will meanwhile take a $3.2 billion dividend from US company Verizon Wireless, in which Vodafone has a 45 per cent stake.

In a conference call, Colao told reporters that Vodafone had “nothing new to announce” about its stake in Verizon Wireless, despite ongoing media speculation, and added that it was a “fantastic asset”.

Turning to the outlook, Vodafone forecast that adjusted operating profit would stand at between £12.0 billion-£12.8 billion in the current 2013-2014 financial year.

In morning deals, Vodafone’s share price firmed 0.05 per cent to 197.70 pence on London’s FTSE 100 index of leading companies, which was 0.09 per cent higher at 6,761.13 points.

“The situation in southern Europe remains one of disappointment,” noted analyst Richard Hunter at Hargreaves Lansdown Stockbrokers.

He added: “The question of the Verizon stake remains at the top of the agenda for investors, although Vodafone’s decision hitherto to stay put continues to reap measurable rewards.”