Spanish telecommunication group Telefónica S.A. (TEF,TDE.L) Wednesday reported higher profit for the first quarter, despite lower revenues, as the prior year included a loss from associated companies and higher net financial expenses. The company said first-quarter results are in line with its internal estimates, allowing it to reiterate financial and operating targets for 2013.
Net income climbed to 902 million euros or $1.18 billion from 748 million euros a year ago. Underlying net profit totaled 1.07 billion euros.
Operating income before depreciation and amortization or OIBDA fell more than 10 percent to 4.57 billion euros.
Revenues dropped to 14.14 billion euros from 15.51 billion euros, reflecting the impact of exchange rate fluctuations due to the devaluation in Venezuela and the changes in the perimeter of consolidation.
Organically, revenue slid 1.6 percent, as growth in Telefónica Latinoamérica could not offset lower revenues of Telefónica Europe, which is still affected by the challenging macroeconomic situation, intense competition and the negative impact of regulation.
Telefónica Latinoamérica, which accounted for 51 percent of consolidated revenues, generated 7.23 billion euros, down 3.8 percent from last year. The segment's revenues were up 6.8 percent on an organic basis, supported by the steady growth of the mobile business.
Telefónica Europe's revenues declined 11.7 percent to 6.675 billion euros and organic revenues fell 10.5 percent.
César Alierta, executive chairman, said, "In the first quarter of 2013 we continued with the transformation process underway by the company, significantly advancing in different priority projects, which are reflected in the progressive business stabilisation and the higher degree of diversification, along with the continuous improvement of our financial position.''
The latest results included profit from associated companies of 18 million euros compared to a loss of 481 million euros last year due mainly to Telco, S.p.A.'s adjustments of the value of its investment in Telecom Italia.
Additionally, net financial expenses declined to 674 million euros from 818 million euros, partly due to the reduction in average debt in the period.
Telefónica managed 315.7 million accesses at the end of March, up 2 percent from last year, driven by sustained growth in mobile contract, especially in smartphones. Mobile accesses grew 3 percent to 247.3 million.
Net financial debt was 51.809 billion euros at the end of March, up 550 million euros from the end of 2012, mainly due to the impact of the Venezuelan Bolivar devaluation totaling 873 million euros. Excluding this impact, net financial debt fell by 323 million euros in the quarter.
The stock is down 1.6 percent in early morning trade in Madrid at 11.10 euros.
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