Telefonica 2Q Net Profit Rises 18% -- Update
July 27 2017 - 2:51AM
Dow Jones News
By Jeannette Neumann
MADRID--Telefonica SA (TEF) posted an 18% increase in net profit
in the second quarter from a year earlier as the Spanish
telecommunications giant also made some progress chipping away at
its debt pile.
The Madrid-based company on Thursday said second-quarter net
profit was 821 million euros ($963 million) versus EUR693 million a
year earlier.
Revenue in the second quarter was EUR13 billion, a 1.9% increase
from the year-earlier period. Telefonica said it was upgrading its
revenue guidance to increase by more than 1.5% in 2017 versus 2016.
The company had previously guided for "stable" growth for the
year.
"The strength and better business trends in the first half of
the year, as well as being well-positioned to continue capturing
sustainable growth in the coming quarters, allow us to upgrade our
guidance for 2017," Executive Chairman Jose Maria Alvarez-Pallete
said in a statement.
Operating income excluding depreciation and amortization was
EUR4.2 billion in the quarter versus EUR3.9 billion a year
earlier.
Telefonica's net debt decreased by EUR279 million in the second
quarter from the first quarter to EUR48.49 billion. That reduction
was thanks to free-cash-flow generation and the lower value in
euros of the net debt in foreign currencies, the company said.
Telefonica said it had to estimate an exchange rate for the
currency in Venezuela, where the company has subsidiaries, "given
the absence of official exchange rates representative of the
economic situation" in the country. The company's new exchange
rate, fixed at 3,547 Venezuelan bolivars to the U.S. dollar, lead
to a negative currency effect overall on Telefonica's earnings, the
company said.
Excluding Venezuela, currency fluctuations would have had a
positive impact on Telefonica's earnings year-on-year due to the
appreciation of other Latin American currencies, such as the
Brazilian real, versus the euro.
On Wednesday, Telefonica's board approved the appointment of
Angel Vila as chief operating officer. The company hadn't had
anyone in that role since Mr. Alvarez-Pallete was promoted from
that post to become chairman and chief executive when longtime head
Cesar Alierta stepped down last year.
To replace Mr. Vila in his previous role as chief finance
officer, the board named Laura Abasolo, who had served as director
of planning, accounting and control and had been on the executive
committee since March 2014.
"Ms. Abasolo is unknown to the equity markets, but looks to have
a strong track record within Telefonica," Fidentiis Equities
analyst James McKenzie wrote in a research report. She had been
overseeing a "simplification of operations," he noted, which "is
likely to be the big driver of cash flow in upcoming years."
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
July 27, 2017 02:36 ET (06:36 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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