Vodafone says annual profit slumps 90% on euro zone woes

LONDON (AFP) - British mobile phone giant Vodafone said on Tuesday that annual net profits tumbled 90 per cent after it took a vast £7.7-billion (S$14.69 billion) impairment charge relating to its businesses in debt-laden euro zone nations Italy and Spain.

Earnings after taxation nosedived to £673 million in the group's financial year to the end of March, compared with £7.0 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 ongoing euro zone sovereign debt crisis.

The company said on Tuesday 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, Mr 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-£12.8 billion in the current 2013-2014 financial year.

Join ST's Telegram channel and get the latest breaking news delivered to you.