Vodafone shares slip after weakness in Europe weighs on 2024 outlook

Investing.com — Shares in Vodafone (LON:) slipped on Tuesday, slumping to their biggest intraday fall since November, after the British telecoms group unveiled forecasts for its 2024 fiscal year that were below projections.

The company said that it expects adjusted earnings before interest, tax, depreciation and amortization after leases for its upcoming financial period to be “broadly flat” at €13.3 billion (€1 = $1.0894). Analysts had estimated that the figure would come in at €13.69B. Projected free cash flow of €3.3B is also 8% under expectations, according to analysts at Morgan Stanley.

The outlook comes after the carrier a 3.6% year-on-year slide in full-year adjusted core income post-leases to €14.67B due in part to weakness at several of its core European markets. The number was seen at €14.73B.

Vodafone’s key businesses in Germany, Italy, and the United Kingdom all missed estimates for the 12 months ended on March 31, reflecting struggles caused by an uptick in energy and wage costs as well as currency headwinds.

Saying Vodafone’s performance “has not been good enough,” new chief executive officer Margherita Della Valle outlined new strategy changes. “We will simplify our [organization], cutting out complexity to regain our competitiveness,” she said in a statement.

Vodafone now plans to reduce its headcount by 11,000 jobs over the next three years as part of the overhaul, while the firm’s operations in Spain will be placed under strategic review. It also aims to turn around sliding returns in Germany, its biggest market.

Analysts at Goldman Sachs said Della Valle’s proposal “hits the right notes,” adding that execution will be key. However, analysts at Barclays argued that apart from the review of the Spanish business and a call for concrete actions, Vodafone did not announce a major pivot of its strategy.