Vodafone reports growth in profits

Mobile phone giant Vodafone reported growth in underlying profits, but admitted it was still feeling the pinch in a tight European market.

The company said adjusted operating profits increased by 7.5% to £5.1bn (€7.54bn) during the first six months of the year to September 30.

It was helped by a 4% increase in revenues to £15.6bn (€23bn) compared with the same period last year, thanks to powerful progress at its Spanish operation.

Chief executive Arun Sarin said pressures in the competitive European zone - especially in the UK, Germany and Italy - had been offset by a strong performance in the company's developing markets.

Vodafone said it was fighting "twin pressures" in Europe caused by price erosion and regulation and stressed its core strategy was to stimulate revenues and cut costs.

Revenues in the UK fell to £2.55bn (€3.77bn) compared to £2.57bn (€3.8bn) last year, while turnover was down 3% in Germany and 2.9% in Italy. There was better news from Spain, where the company saw revenues up 15% to £2.7bn (€4bn), and in the US, where its Verizon Wireless network saw 18% growth.

Vodafone reported a bottom-line loss before tax of £3.3bn (€4.88bn), compared to a £3.9bn (€5.76bn) profit last year, as it was hurt by higher interest rates, along with pricing and regulatory pressures in the German market.

The company admitted average monthly voice usage per customer was still below 150 minutes and said it would concentrate on getting more customers on pre-paid phones to take up contracts.

Mr Sarin said: "These results show that Vodafone is on track to deliver on its key targets for the current financial year. Competitive and regulatory pressures in the European region have been offset by strong performances in our developing markets and the US.

"We have also made good progress since May in the execution of our new strategy and the response to our new products and services has been very encouraging."