Vodafone Earnings: Weak Profits, but Management Heading in the Right Direction

Vodafone’s results were not particularly good in our view as adjusted EBITDA after leases declined strongly in its four core markets, largely hit by energy prices. Italy and Spain had organic declines of 11.6% and 15%, respectively, while Germany and the U.K. had declines in the 5% range. Adjusted EBITDAaL managed to increase 0.3% organically though due to high revenue growth in Turkey and cost reductions at Vodafone’s headquarters. We're adjusting our medium-term forecasts because we think Vodafone will slightly miss its guidance for fiscal 2024 and slightly trim our margin forecasts for the next 5 years. We maintain our GBX 125 fair value estimate, but will remain vigilant for any signs that might indicate a further fundamental deterioration.