Telefónica surges to Q3 profit as Latin American business overtakes Europe

Telefónica's posted a net profit for the third quarter thanks in large part to its successful Latin American operations, which offset poor performances from its European businesses.

The company said that net profit for the quarter ending in September was €1.38 billion, compared to a €429 million loss in the same period a year ago, largely due to one-off redundancy costs that impacted in Telefónica's domestic business last year, according to Dow Jones Newswires.

The company said revenue from its Latin American operations outweighed its European businesses for the first time and now accounted for 49 per cent of Telefónica's turnover, according to Reuters.

Telefónica said overall revenue fell 1.6 per cent in the third quarter, with a 6.8 per cent fall revenue from in its European operations outweighing a 3.8 per cent across the company's Latin American businesses.

"We are making further progress in our transformation journey and the results achieved so far make us feel more positive about the future despite tough conditions," CEO Cesar Alierta said in a statement.

The company also reiterated its 2012 targets, including a net debt goal of less than 2.35 times operating income before depreciation and amortisation, according to Bloomberg, as well as confirming a plan to pay a €0.75 cent dividend in 2013.

"I see nothing that's incrementally worrisome or materially positive," Guy Peddy, an analyst at Macquarie Securities in London, told Bloomberg. "They've done what they said they would do, so they tick the boxes in the quarter."

Alierta also indicated that debt reduction was still a priority, and that more asset sales were being planned, including offering shares in its Latin American businesses. "This is actually more comforting than discomforting, but there's still a long way to go," Peddy said.

Telefónica's debt, a focus of concern for industry analysts, fell by €2.3 billion in the quarter to €56 billion. The company said that several steps it took to reduce its debt were completed after the close of its third quarter and will lower its debt load by an additional €3.18 billion, according to Dow Jones Newswires.

For more:
- see this Telefónica release
- see this Dow Jones Newswires article
- see this Reuters article
- see this Bloomberg article

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