LONDON, Feb 3 – British mobile phone giant Vodafone defied the economic storm by reporting better-than-expected third quarter sales on Tuesday, up 14 percent due to the strong euro and strength in key markets.
Vodafone said in an upbeat trading update that revenues rallied to 10.470 billion pounds (11.6 billion euros, 14.8 billion dollars) in the three months to the end of December, compared with 9.163 billion the previous quarter.
"In the context of the current economic environment, we have continued to implement our strategy, with an emphasis on customer value, mobile data" and broadband Internet, said Vodafone chief executive Vittorio Colao.
"We have also made progress on our plans to reduce costs by 1.0 billion pounds by March 2011," added Colao, who succeeded Arun Sarin last July, in a company statement.
"The cost savings are very wide-ranging, and will at some point impact headcount," he was also quoted as saying by Dow Jones Newswires.
The positive update sent the company\’s shares roaring to the top of the FTSE 100 risers board. In late trade on Tuesday, Vodafone\’s share price leapt 6.8 percent.
"The figures came in ahead of market expectations and will allay concerns over the resilience of the business to a downturn in economic growth," said Jonathan Jackson at brokers Killik & Co, in a note to clients.
"The group highlighted good progress has been made and cost savings of approximately 500 million pounds are expected to be generated by the end of the 2010 financial year," he added.
Vodafone reported that sales of its services rose 15 percent in Europe, boosted largely by the recent strength of the euro against the pound, the currency in which Vodafone\’s results are quoted.
Sales were particularly strong in Italy and Germany, it said, which offest weakness in Spain.
So-called organic revenue, a measure of the performance that strips out extraordinary factors including exchange rate movements, was down 1.4 percent in the quarter in this region, however, and by one percent overall.
These were "trends broadly similar to second quarter (of 2008) in a weaker market environment," it said.
The group\’s debt increased, meanwhile, since part of it is held in foreign currencies.
"The benefits of currency have been reversed to some extent by the impact on debt levels," Jackson said, but still expressed confidence in the company\’s finances.
The group slightly raised its forecast for operating profits from 11.5 billion to 12 billion pounds for 2009.