Vodafone Group Public Limited Company · LSE:VOD
Vodafone Group Public — Vodafone Group — FY2022 Earnings Presentation
41 slides from Vodafone Group Public's earnings presentation, May 17, 2022
Slide 1: FY22 Results
FY22 Results 17 May 2022
Slide 2: Agenda & contents
Agenda & contents Highlights Nick Read p3 Chief Executive Financial Margherita Della Valle p7 performance Chief Financial Officer We connect for a better future Strategy, operations Nick Read p19 Chief Executive The new generation connectivity & digital & portfolio services provider for Europe & Afr
Slide 3: Conclusions: Highlights
Conclusions Highlights Good financial performance in line with expectations Delivering organic growth strategy + clear operational priorities Actions underway to manage macroeconomic sector challenges Committed to improving returns through growth + portfolio priorities FY22 Results May 2022 3
Slide 4: Good financial performance & strong ROCE step-up
Highlights ⫶ Good financial performance & strong ROCE step-up Conclusions Service revenue growth Adjusted EBITDAaL2 growth ROCE inflection Pre-tax ROCE (LTM) Ex-roaming & visitor revenue FY22 +2.6% 16 +170bps 3.5% +5.0% 7.00% 7.2% 3.3% 3.0% 15 €15.2bn €14.9bn 6.3% 6.3% 2.5% 6.00% 2.7% 2.0% 2.4% 14 €
Slide 5: Systematic execution of our organic growth strategy
Highlights ⫶ Systematic execution of our organic growth strategy Conclusions European mobile contract churn (LTM) 1.6 Cumulative net EU opex savings 17 .00 % 16 .50 % 1.4 16 .00 % 16.1% 1.2 €1.5bn 15 .50 % 15.5% €1.3bn €1.3bn 15.0% 1 €1.1bn 15 .00 % 14 .50 % 14.6% 0.8 13.8% €0.8bn 14 .00 % 13.7% 13.
Slide 6: Improving shareholder returns requires continued action
Highlights ⫶ Improving shareholder returns requires continued action Conclusions Organic growth value levers… …combined with portfolio priorities Medium-term ambition Best connectivity • Revenue growth products & services • Margin expansion Revenue Growth in both Europe & Africa Pursuit of value cre
Slide 7: Financial performance
Financial performance Margherita Della Valle Chief Financial Officer FY22 Results May 2022 7
Slide 8: Financial summary: Good performance with ROCE inflection
Financial summary ⫶ Good performance with ROCE inflection FY21 FY22 Organic €m €m change2 Group service revenue 37,141 38,203 2.6% • Consistent service revenue trend with Adjusted EBITDAaL 14,386 15,208 5.0% growth in both Europe & Africa Adjusted EBITDAaL margin 32.8% 33.4% • Mid-single digit EBITD
Slide 9: Trading performance: Sustained service revenue growth
Trading performance ⫶ Sustained service revenue growth Group YoY quarterly service revenue growth 5.0% FY22 • FY22 highlights 4.0% 3.3% +2.6% - Improving trend in 10 out of 11 European markets 3.0% 2.4% 2.7% - Broad-based growth in Africa 2.0% 2.0% - Roaming & visitor revenue +54% YoY, 1.0% 0.8% bro
Slide 10: Germany: Good EBITDAaL growth, focused on commercial recovery
Germany ⫶ Good EBITDAaL growth, focused on commercial recovery Service revenue growth Retail Reported organic 37% of Group EBITDAaL1 Q4 FY22 FY22 growth €m growth Service revenue +0.8% 11,616 +1.1% 2.0% 1.8% 1.9% 2.0% 1.5% 1.7% Adjusted EBITDAaL 5,669 +6.5% 1.5% 1.2% 1.5% 1.0% 1.4% 1.0% 1.2% 1.0% 1.
Slide 11: Italy: Resilient performance; UK: Strong momentum
Italy ⫶ Resilient performance UK ⫶ Strong momentum 11% of Group EBITDAaL1 9% of Group EBITDAaL1 Q4 FY22 FY22 Q4 FY22 FY22 growth €m growth growth €m growth Service revenue (0.8%) 4,379 (1.8%) Service revenue 2.0% 5,154 1.3% Adjusted EBITDAaL 1,699 6.4% Adjusted EBITDAaL 1,395 3.3% Service revenue gr
Slide 12: Spain: Low-end highly competitive; Other Europe: Growth engine
Spain ⫶ Low-end highly competitive Other Europe ⫶ Growth engine 6% of Group EBITDAaL1 11% of Group EBITDAaL1 Q4 FY22 FY22 Q4 FY22 FY22 growth €m growth growth €m growth Service revenue (5.1%) 3,714 (2.0%) Service revenue 2.7% 5,001 3.0% Adjusted EBITDAaL 957 (1.1%) Adjusted EBITDAaL 1,606 1.4% Net a
Slide 13: Vodacom: Solid growth; VodafoneZiggo: In line vs guidance
Vodacom ⫶ Solid growth VodafoneZiggo ⫶ In line vs guidance 14% of Group EBITDAaL1 50% joint venture Q4 FY22 FY22 growth €m growth EBITDA growth Service revenue 3.1% 4,635 4.6% 6.0% 5.1% South Africa 3.2% 3,395 3.8% Internationals 2.0% 1,266 6.3% 4.0% 2.8% 2.4% 2.1% Adjusted EBITDAaL 2,125 3.4% 2.0%
Slide 14: Costs: Strong track record of consistent efficiency improvement
Costs ⫶ Strong track record of consistent efficiency improvement Digital Scale 25% • 35% reduction in frequency of Simple 35% • 8,200 role efficiencies in VOIS contacts 40% FY19-22 (40% productivity improvement) €1.5 billion • 45% of total customer contacts 40% delivered • Average procurement saving
Slide 15: Adjusted EBITDAaL: Strong margin progression
Adjusted EBITDAaL ⫶ Strong margin progression Group EBITDAaL margin 16 .0 0.2 (0.3) €15.2bn 0.2 15 .5 (0.2) +5.0% 35 .0% €14.5bn 0.8 YoY 15 .0 34 .5% 33.4% 34 .0% 14 .5 33.1% 32.8% 33 .5% 14 .0 33 .0% 13 .5 32 .5% 31.9% 32 .0% 13 .0 31 .5% 31 .0% 30.6%3 12 .5 30 .5% 12 .0 30 .0% Organic Direct Roami
Slide 16: Free cash flow: Ahead of expectations
Free cash flow ⫶ Ahead of expectations -1 .5 0.5 2.5 4.5 6.5 8.5 10 .5 12 .5 14 .5 16 .5 EBITDAaL €15.2bn • Interest: €0.3bn lower YoY, prior year liability management Interest • Tax: €0.1bn lower YoY, timing of German tax payments (€2.2bn) & tax • Restructuring & integration: Working capital & othe
Slide 17: Capital allocation: ROCE step-up through EBITDAaL growth
Capital allocation ⫶ ROCE step-up through EBITDAaL growth Capital additions Return on Capital Employed improving FY211 FY22 YoY €m €m ∆ 8.0% +0.5% +0.1% +1.1% Network & IT maintenance 2,266 2,299 1% 7.0% 7.2% 6.0% Coverage & capacity (inc. VTWR) 2,584 3,011 17% 5.5% 5.0% IT transformation 916 827 (1
Slide 18: FY23 guidance: Mitigating impacts of macro-economic challenges
FY23 guidance ⫶ Mitigating impacts of macro-economic challenges FY23 Adjusted EBITDAaL FY23 Adjusted FCF 16 .0 €15.0- 15.5bn 5.6 15 .5 €5.4bn €15.2bn 5.4 €5.3bn c.€5.3bn 15 .0 (0.1) €14.9bn 5.2 (0.1) (0.2) 5.0 14 .5 >0.3 4.8 14 .0 4.6 4.4 13 .5 4.2 13 .0 4.0 FY22 FY22 One-off FX FY22 FY22 Extraordin
Slide 19: Strategy, operations & portfolio
Strategy, operations & portfolio Nick Read Chief Executive FY22 Results May 2022 19
Slide 20: The new generation connectivity & digital services provider
The new generation connectivity & digital services provider 1 Delivering organic growth strategy + clear operational priorities 2 Actions underway to manage macroeconomic sector challenges 3 Committed to improving shareholder returns + portfolio priorities FY22 Results May 2022 20
Slide 21: Systematic execution of our organic growth strategy
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns Systematic execution of our organic growth strategy • Benchmarking study shows top quartile efficiency in sector with further opportunity Best connectivity 5G launched & live Inv
Slide 22: Strengthen commercial momentum in Germany
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns A ⫶ Strengthen commercial momentum in Germany Financial performance has been consistent… … but trading is unsatisfactory • Fixed network upgrade roadmap progressing well • Expand
Slide 23: Accelerate operational transformation in Spain
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns B ⫶ Accelerate operational transformation in Spain Executing organic transformation plan… … with plans to structurally improve ROCE Spain mobile contract churn (LTM) • Significan
Slide 24: Position Vodafone Business to capture EU funding opportunities
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns C ⫶ Position Vodafone Business to capture EU funding opportunities Our initial SMEs wins demonstrate encouraging potential Public sector infrastructure investment projects SME ‘D
Slide 25: Vodafone is structured to manage challenges effectively
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns Vodafone is structured to manage challenges effectively Rising Energy usage of 5.9TWh p.a., FY22 total cost of €850m, Commercial energy costs FY23 75% hedged1 agility Risk of Ave
Slide 26: Effectively balancing local autonomy & regional standardisation
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns Effectively balancing local autonomy & regional standardisation In-market autonomy ensuring local agility + Regional standardisation delivering scale benefits Networks Full end-t
Slide 27: Well positioned to effectively manage macroeconomic challenges
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns We are well positioned to effectively manage macroeconomic challenges Improving commercial agility Enhancing operational efficiency Inflation- • UK & Ireland successfully impleme
Slide 28: Value levers: Organic growth strategy + portfolio optimisation
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns Value levers ⫶ Consistent execution of organic growth strategy + portfolio optimisation Organic growth value levers …combined with portfolio priorities Medium-term ambition Best
Slide 29: Value levers: We are structured for value creation
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns Value levers ⫶ We are structured for value creation Infrastructure assets Shared operations Growth platforms Retail & service Passive mobile Supplier management Digital services
Slide 30: Value levers: Clear value-creation agenda
1 ⫶ Delivering organic growth strategy 2 ⫶ Managing macroeconomic challenges 3 ⫶ Committed to improve shareholder returns Value levers ⫶ Clear value-creation agenda Infrastructure assets Shared operations Growth platforms Retail & service Passive mobile Supplier management Digital services Europe Co
Slide 31: Conclusions
Conclusions Good financial performance in line with expectations Delivering organic growth strategy + clear operational priorities Actions underway to manage macroeconomic sector challenges Committed to improving returns through growth + portfolio priorities FY22 Results May 2022 31
Slide 32: Appendices
Appendices I More information p33 II Our regional footprint p34 III Network quality achievements p35 Provide investor feedback here ⫶ IV Definitions p36 quantifire.co.uk/vodafone-68743521/ V Supporting information p37 VI Statutory results summary p38 Net debt, liquidity & total VII p39 funding oblig
Slide 33: Appendix I: More information
Appendix I ⫶ More information • 5-part video presentation Vodafone Business ⫶ Investor briefing • 8 video case studies investors.vodafone.com/vbbriefing • 64-page documents • Analyst Q&A video replay • 5-part video presentation Technology ⫶ Investor briefing • 5 video case studies investors.vodafone
Slide 34: Appendix II: Our regional footprint
2 ⫶ We are the Appendix II ⫶ Our leading regional connectivity footprintprovider in Europe & Africa. Europe ⫶ converged connectivity leader Africa ⫶ leading data & payments provider 42.8m 5.4m 3.3m 17.1m 2.1m 31.2m 1.1m 7.8m 0.3m 10.8m 4.0m 0.6m 42.4m 15.5m 3.0m 9.4m 0.7m 0.7m 15.4m 17.9m 3.1m 1.5m
Slide 35: Appendix III: Network quality achievements
2 ⫶ We are the Appendix III ⫶leading Networkconnectivity quality achievements provider in Europe & Africa. Awards Publications 4G Mobile Experience Mobile networks 5G Mobile Experience Video Upload Speed Experience Experience Fixed networks FY22 Results May 2022 35
Slide 36: Appendix IV: Definitions
Appendix IV ⫶ Definitions Term Definition Term Definition Adds Number of new customers within a defined period MCB Mandatory convertible bond Adjusted EBITDA Operating profit after depreciation on lease-related right of use assets and interest on leases but excluding depreciation, amortisation MTR M
Slide 37: Appendix V: Supporting information
Appendix V ⫶ Supporting information 1. Quarterly revenue The information opposite is available in spreadsheet format 2. Group financial performance via investors.vodafone.com 3. Summary of financial performance 4. Segmental analysis 5. New segmental reporting structure 6. Analysis of cash flow 7. Mo
Slide 38: Appendix VI: Statutory results summary
Appendix VI ⫶ Statutory results summary Consolidated income statement Year ended 31 March 2022 2021 €m €m Revenue 45,580 43,809 Cost of sales (30,574) (30,086) Gross profit 15,006 13,723 Selling and distribution expenses (3,358) (3,522) Administrative expenses (5,713) (5,350) Net credit losses on fi
Slide 39: Appendix VII: Net debt, liquidity & total funding obligations
Appendix VII ⫶ Net debt, liquidity & total funding obligations 50 .0 48 .0 Net debt progression (€ billion) Total funding obligations FY22 FY21 46 .0 €m €m Bonds (48,031) (46,885) Bank loans (1,317) (1,419) 44 .0 0.2 2.7x 42 .0 2.8x Other borrowings including spectrum (3,909) (4,215) 40 .0 0.1 2.0 G
Slide 40: Appendix VIII: Important notice
Appendix VIII ⫶ Important notice You have been provided access to this presentation on the basis that you are an investment This presentation, along with any oral statements made in connection therewith, contains professional for the purposes of Article 19 or a member of the press for the purposes o
Slide 41: Investor relations contacts and upcoming events
Group investors.vodafone.com Upcoming events Investor Relations ir@vodafone.co.uk 1 Kingdom Street, London, W2 6BY July Q1 FY23 trading update 2022 Matthew Johnson Director matthew.johnson@vodafone.com Group IR Daniel Morris Deputy Director Group IR daniel.morris@vodafone.com July Annual General Mee