Vodafone and Barclays boost FTSE 100

The mobile provider has posted a 43% jump in profits, while the bank says its capital ratio remains 'strong'. Champers all round, then...

by Emma Haslett
Last Updated: 15 Nov 2010
London Stock Exchange-types have had a pleasant start to the morning, after two of the FTSE 100’s largest companies announced strong(ish) results. Vodafone was the clear success story of the two, raising its full-year profit expectations to something in the range of £11.8bn-£12.2bn after profits for the last six months jumped by an impressive 43%, to £8.2bn. Barclays was slightly more cautious, with year-on-year profits before tax rising by 6% to £4.24bn – despite big losses at Barcap, its investment banking arm. Which could be a bit frightening for incoming CEO (and current Barcap chief) Bob Diamond…

For Vodafone, which has spent the last year of two vigorously cutting costs, the focus is now on data. With the market for traditional voice offerings pretty much saturated in Europe, the company says the demand for smartphones growing. So much so, in fact, that it’s planning to raise the number of users with data plans from about 30% to 70% by 2013. And, to help them afford its data services (how generous), it’s planning to introduce new tariffs, based on the amount of data customers use – and the sort of quality they’re looking for. Which could be the beginning of the end of the days of catching up on iPlayer on the train home without having to worry about your bill…

It’s also making a high-profile exit from Japan, selling off its £3.1bn stake in Vodafone Japan to local bank Softbank. The exit comes a couple of months after Vodafone also bowed out of China, selling off its stake in China Mobile for $6.5bn (£4bn). Vodafone says its focus now is on growing markets in Europe, Africa and, crucially, India – one of its strongest areas of growth, but also the cause of many headaches, after it was made to pay £2.4bn for a 3G license earlier this year, as well as being forced to shell out for a ‘retrospective one-time fee’ of £2.3bn for a high bandwidth 2G radio spectrum it had bought a few years ago. Which had to smart.

Barclays, on the other hand, is firmly keeping its focus at home. While the last three months did see a big drop for Barcap – from a profit of £369m to a loss of £182m, that can be explained by accounting rules which mean the bank has to include the cost of paying its own debt. If you take those costs out, though, profits were £765m – which is almost double the previous figure. So not as scary as it looks. The ‘strong’ results even caused shares to rise by 2.5% to 293p, one of the biggest rises on the FTSE 100 this morning. Which must have come as a relief to CEO John Varley, who will be stepping down next year.

The bank also announced that it’s setting aside £1.6bn for bonuses this year – news that’s sure to kick off the annual festive bonus debate, now as synonymous with this time of year as mince pies and roasted chestnuts. We can feel a Christmas carol coming on…

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