Adverse foreign exchange moments and impairments of £3.03bn in Spain, Romania and India meant Vodafone delivered an adjusted half year operating loss of £1.21bn.
However, the British multinational telecommunications conglomerate announced that underlying numbers were more robust. For example, lower operating costs helped organic earnings before interest, tax, depreciation and amortisation (EBITDA) rise 2.9% to £6.15bn, slightly ahead of consensus forecasts.
Following this news, the share price for Vodafone rose 6.6% and the interim dividend was held flat at £0.042 per share.
George Salmon, Equity Analyst at Hargreaves Lansdown commented:“There are two reasons these results are going down well with the market.
“Reducing operating costs for a third consecutive year has helped earnings come in slightly ahead of prior expectations, while the group’s confirmed a marginally more upbeat outlook for the full year. That’s helped ward off fears of an imminent rebasing of the dividend – clearly good news for those holding Vodafone for its 8%+ yield.
“Moves to make Vodafone simpler have also been given the thumbs up. Not only should the plans open the door to cost savings, a sale of the Towers business could see a couple of billion flow into the coffers. With debts well over £26bn at the moment, anything that lightens the burden is welcome.
“However, longer-term challenges remain. The cash demands of rolling out 4G and 5G services will be significant, so while these results provide some welcome short-term assurance, questions over the sustainability of the dividend will likely linger.”