Mobile operator Vodafone raised its forecast for this year’s free cash flow on Tuesday after it reported 6.5% growth in adjusted core earnings in its first half, driven by a good performance in Germany, its largest market.
Shares in Vodafone, which have fallen 15% since the start of its financial year, rose as much as 5% in early deals to 118 pence.
The British company raised the floor of its full-year earnings guidance to 15.2 billion euros ($17.3 billion) from 15.0 billion euros, with the top remaining at 15.4 billion, and increased its free cash flow target to at least 5.3 billion euros from at least 5.2 billion.
Chief Executive Nick Read said Vodafone had “solid commercial momentum”.
“Our strengthened performance in Africa and Europe puts us on track to be at the top end of our guidance for this year, as well as firmly within our medium-term financial ambitions,” he said.
Vodafone said its total revenue grew 5% to 22.5 billion euros in the six months to end-September, driven by service revenue growth in Europe and Africa and a recovery in handset sales following COVID-19 disruption in the prior year.
Adjusted core earnings came in at 7.6 billion euros, with growth boosted by a 0.7 point margin increase.
Analysts are likely to nudge up forecasts. They had expected Vodafone to report earnings of 15.2 billion euros this year and generate cash flow of 5.23 billion euros, according to a company-compiled consensus.
Organic service revenue grew 1.2% in both Germany and Britain, but fell 2.5% in Italy, and declined 0.6% in Spain after growth in the first quarter evaporated in the second.
Vodafone said it had stabilised its financial performance in the intensively competitive Spanish market.
It said it was “actively pursuing” opportunities in the country, including enhancing strategic network partnerships and in-market consolidation.