Vodafone jumps 2% despite disappointing European performance
(Guardian Web Via Acquire Media NewsEdge) Vodafone shares are leading the market higher as analysts remained positive despite a disappointing trading update.
The telecoms group reported a 2.6% fall in revenues in the second quarter, slightly higher than the 2.4% decline expected by the market. European markets remained challenging, with the economic downturn exascerbated by the need to continue investing in its network to bring faster connection speeds to customers. UK revenues fell by 5.25% but in Italy the drop was 13.8% and in Spain, 11.3%. However the company - which recently bought Cable & Wireless Worldwide - confirmed its full year operating profit guidance. Chief executive Vitorio Colao said:
Our results continue to reflect very difficult market conditions in Europe. We are addressing this through firm actions on cost efficiency, and continuing to invest in areas of growth potential.
Its shares have climbed 3.35p to 173.7p, a rise of nearly 2%. The City is expecting some corporate action revolving around its joint venture in the US, Verizon Wireless, where revenues grew by 8.7%. Expectations range from its partner buying out Vodafone's share, to a full takeover of the UK business. Analyst Lawrence Sugarman at Liberum Capital kept his buy recommendation on the business, saying:
Revenue trends were broadly as expected, with disappointment relative to expectations in Germany, UK and Vodacom, some positive offset in Turkey and to some extent Spain. We believe that some of the negative impacts on revenues in the markets where there were disappointments have been offset by positive margin developments. We therefore don't expect earnings forecasts to change despite the slight miss.
We expect the short term reaction to be modestly positive and we reiterate our buy case, which is predicated on anticipating Verizon Wireless developments and the view that the shares offer considerable value.
News of an agreement over a tax dispute in India would also help sentiment, he said.
Vodafone's rise has helped the FTSE 100 edge up 2.60 points to 6297.94 despite continuing worries about the broader economic picture, and nervousness ahead of the Bank of England and European Central Bank meetings, and the latest EU summit which begins later.
Elsewhere catering group Compass has climbed 11.5p to 777p after it reported a 6% rise in first quarter revenues, with US and emerging markets helping to offset weak conditions in Europe. Investors shrugged off news that Sir Roy Gardner intended to step down as chairman in a year's time.
But Burberry was not so lucky as it announced management changes. Shares in the luxury goods group have fallen 61p to £13.69 as chief financial officer Stacey Cartwright announced plans to leave, to be replaced by Carol Fairweather, who has been with the group for six years.
SuperGroup, up 62p at 695.5p, and Ocado, 7.1p higher at 111p, are leading the FTSE 250 risers after positive updates.
Meanwhile in Europe, shares in Lanxess, the German chemicals group, have jumped 4% to €64 on market talk of possible interest from US group Dow Chemical at €70 to €80 a share.
(c) 2013 Guardian Newspapers Limited.
[ Back To middleeast.tmcnet.com.com's Homepage 's Homepage ]