LONDON, May 17 – British mobile phone giant Vodafone said on Tuesday that annual net profit sank 7.8 percent, on a huge impairment charge for its operations in debt-ravaged nations in southern Europe.
Earnings after tax fell to £7.97 billion (9.16 billion euros, $12.94 billion) in the 12 months to the end of March, compared with £8.65 billion in 2009/2010, Vodafone said in a results statement.
Impairment losses meanwhile ballooned to £6.15 billion, which compared with £2.1 billion last time around. The group blamed weak economic environments in Greece, Italy, Ireland, Spain and Portugal.
However, total sales increased by 3.2 percent to £45.88 billion, which was ahead of analysts forecasts for £44.47 billion.
"The past year has seen further strong performances in our key revenue growth areas of data, emerging markets and enterprise, and we have gained or held market share in most of our key markets," added Chief Executive Vittorio Colao in the earnings release.
He added: "We enter the new financial year well positioned to deliver further value to our shareholders."
The group has sold off non-core assets over the past year in China, France and Japan.
Vodafone said it expected to raise a total of £14.2 billion from the sale of its interests in China Mobile, SoftBank and SFR, while it has committed £6.8 billion to share buyback programmes.
Vodafone paid $5 billion in March, to buy out its Indian partner Essar from their mobile phone venture, increasing its exposure to faster-growing emerging markets.
The group also forecast on Tuesday that adjusted annual operating profits would rise in the current 2011/2012 financial year to £11.0-11.8 billion.
Hargreaves Lansdown analyst Richard Hunter said Vodafone posted "robust" numbers and was reaping the benefits from the rising popularity of smartphones and tablet computers.
"Vodafone has had a busy year strategically, but has been able to keep its eye on the ball in posting another set of robust numbers," Hunter said.
"The disposal programme has been in line with the commitment to realise maximum value from non-controlled assets, which in turn will allow an increase in the buyback scheme in conjunction with paying down some debt.
"In addition, the increasing popularity of smartphones and tablets is driving an increase in data service income, whilst the penetration of this market is showing some promising signs."
Earlier this month, Vodafone confirmed that it was selling its 44 percent stake in French rival SFR to media group Vivendi for 7.75 billion euros ($11 billion) in cash.
