Vodafone Shares Plunge
Vodafone Group Plc warned that its struggling Japanese unit would curb profit margin growth in 2007, casting a pall over strong half-year results and sending its shares plunging almost 10 percent. Further disappointment that Japanese profit margins fell by 6 percentage points in the half-year, coupled with a warning of another "significant reduction" in the year to March 2007 and a cautious group outlook for 2007, helped propel the shares lower. "I think there’s no clear reason for Vodafone to remain in Japan," said Jim Wright, fund manager at the British Steel Pension Fund, a Vodafone shareholder.
“I think it’s a drag on earnings, it’s a drag on cash flow and a drag on sentiment.” But Vodafone insisted its Japanese turnaround programme was on track, that margins in the cut-throat market would bottom out around 2006-2007 and that it remained committed to the market.
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