February 5, 2017
Vodafone, the world’s largest mobile phone company by revenue, has increased its full year sales forecast because of the weak pound.
Whilst many UK businesses are suffering under rising import costs, Vodafone is making the most of the poor exchange rate which makes its overseas sales more valuable.
The company increased its full year pre-tax profit forecast by £500 million, to between £11.5 and £12 billion, because 96% of its profits are in foreign currencies.
Revenues for the three months ending 31 December increased 14.3% on year due to the favourable exchange rate.
However, ignoring the favourable exchange rate and recent acquisitions, organic revenue in the three months declined 1%.
Europe was the hardest hit region, with customers cutting back on spending.
Revenues from handset sales in Europe fell 17% with customers delaying upgrades.
Growth in emerging markets offset most of the decline in Europe, with revenues for Asia, Pacific and Middle East operations up 26.9% to £1.39 billion.
The company said although customers aren’t buying new handsets, they are continuing to use their mobile phones.
Use of data services – such as emails and internet access – has increased 25%.
Chief executive Vittorio Colao said he plans to retain customers and encourage them to use their phones more.
He added that the company has made ‘progress’ in its cost cutting strategy that will reduce costs by £1 billion by March 2011.