Vodafone cuts its cashflow forecast and has decreased earnings guidance, reflecting the rising energy costs and a deteriorating performance in Spain, Germany, and Italy. Nick Read, chief executive officer of Vodafone, said that Vodafone had to navigate a challenging macroeconomic environment, which forced it to reduce its cashflow forecast by 200 million euros to around 5.1 billion euros for the year to end in March 2023.
Nick Read said that they are tacking a number of steps to mitigate the economic impacts of high energy costs, and increasing inflation. The first and most important, given the historical deflation in their industry, they have taken proactive price action throughout their markets across Europe.
Vodafone is increasing prices in 11 out of 12 markets, with a majority implementing the inflation-linked increases. The group, which is facing a 300 million euro increase in the energy bill in 2022, also plans to cut 1 billion euros of costs in the next three years, including simplifying tariffs.
Vodafone has lowered its adjusted core earnings target a range between 15 billion and 15.2 billion euros, from the previous 15 billion euros to 15.5 billion euros. The shares of Vodafone dropped by 9 percent, however, with analysts saying that they expect a decreasing cashflow and earnings expectations for the year to March 21, 2024.
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