Vodafone Reports €411 Million Operating Loss in FY25 Results
Why we think this is bad
The FY25 results paint a challenging picture for Vodafone. The company swung to a significant operating loss of €411 million, a stark contrast to last year's €3.7 billion profit. This was compounded by substantial impairment charges totaling €4.5 billion, primarily in Germany. While total revenue grew by 2.0%, organic service revenue growth slowed, and the Adjusted EBITDAaL margin contracted. The dividend was halved, reflecting financial pressures. Despite some positives like reduced net debt, the overall financial health appears strained, with the company facing headwinds in key markets and needing a turnaround in Germany. The outlook for FY26 suggests only modest growth, indicating ongoing challenges in the competitive telecom landscape.
Key Points
- Operating loss of €411 million, down from €3.7 billion profit last year
- Impairment charges of €4.5 billion, mainly in Germany
- Total revenue up 2.0% to €37.4 billion
- Organic service revenue growth slowed to 5.1%
- Adjusted EBITDAaL margin decreased to 29.2% from 30.0%
- Net debt reduced to €22.4 billion from €33.2 billion
- Dividend halved to 4.5 eurocents per share
- FY26 outlook: Adjusted EBITDAaL €11.0-€11.3 billion, Adjusted free cash flow €2.6-€2.8 billion
Summary
Vodafone's FY25 results reveal significant challenges. The company reported an operating loss of €411 million, a stark reversal from last year's €3.7 billion profit. This was largely due to impairment charges of €4.5 billion, primarily in Germany. While total revenue grew by 2.0% to €37.4 billion, organic service revenue growth slowed to 5.1%. The Adjusted EBITDAaL margin decreased to 29.2% from 30.0%, indicating margin pressure. On a positive note, net debt decreased to €22.4 billion. However, the company halved its dividend to 4.5 eurocents per share. Looking ahead, Vodafone expects Adjusted EBITDAaL of €11.0-€11.3 billion and Adjusted free cash flow of €2.6-€2.8 billion for FY26, suggesting modest growth amidst ongoing challenges in the competitive telecom landscape.