Vodafone shares sank on Tuesday and approached multi-year lows as investors reacted to the telecom group’s preliminary results.
Vodafone shares were down 3.7% to 86.4p at the time of writing. The stock traded around 83p in December 2022, the lowest level since 1997.
The grave state of the telecoms group was reflected in the action taken by the new CEO with the slashing of around 11,000 in an effort to cut costs and boost profits.
Indeed, Vodafone CEO Margherita Della Valle was quite clear in her views of Vodafone’s progress in 2023. “Our performance has not been good enough,” Della Valle said. It’s hard to argue otherwise.
Although operating profit jumped significantly, it was due to the disposal of Vantage Towers. Underlying business performance was poor.
Revenue grew just 0.3% to €45.7bn and service revenue declined to €37.9bn. Adjusted free cash flow decreased to €4.8bn in 2023 from €5.4bn.
“Lacklustre performance has been something markets have come to expect from Vodafone of late, and full-year results didn’t buck the trend. Higher energy costs and continued weakness in Germany meant underlying cash profit came in below the recently downgraded company guidance,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
“New CEO, Margherita Della Valle, has been very vocal about the host of challenges she’s facing in her new role – the honesty is refreshing but not enough to keep shares from falling on the news.
“Today, Vodafone outlined some of its new strategies to combat poor performance, which include cutting around 11,000 jobs over the next three years, streamlining operations and focusing on Vodafone Business. This makes sense on paper, but markets will need to see tangible results over the coming year before they get more excited.”