By David Latona
MADRID (Reuters) – Spain’s Telefonica reported a 2.8% drop in full-year adjusted profit on Thursday as it wrote off over 2 billion euros ($2.09 billion) in the fourth quarter due to the impairment of Latin American assets.
The telecoms company’s shares dropped 1.5% in early trade after the results.
Telefonica said adjusted profit totalled 2.3 billion euros in 2024, beating forecasts of 1.8 billion euros in an LSEG poll of analysts. However, the company reported an accounting loss of 1 billion euros in the fourth quarter, mainly due to impairments for its businesses in Argentina, Peru and Chile, leading to a full-year loss of 49 million euros.
Telefonica said it met every financial target for 2024 and reduced its leverage by 2.8 times as of December.
This year, Telefonica expects organic growth for revenue and adjusted EBITDA, with free cash flow seen remaining similar to 2024 levels. The company also plans to continue its leverage reduction.
“We maintained momentum in our key markets, Spain, Brazil, Germany and Britain, with solid cash generation,” Executive Chairman Marc Murtra, who was named to the post on January 18, said in a statement.
Telefonica’s shares had risen nearly 10% since the start of this year before Thursday’s decline.
The company has been unloading assets to cut a previously crippling debt pile and raise cash for new 5G tech investments while facing stiff competition.
Telefonica is trying to gradually reduce its exposure to Latin America, as market volatility in the region has impacted share performance. On Tuesday, Telefonica sold its Argentina unit for $1.25 billion, marking the first corporate transaction under Murtra.
Full-year revenue and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 1.6% and 1.2%, respectively. Cash flow surged by 14.1% during the year.
Without the provisions, fourth-quarter net profit fell to 425 million euros from 730 million euros in the same period in 2023. Telefonica said exchange rate movements, mainly the depreciation of the Brazilian real, negatively affected revenues.
Analyst Javier Cabrera of XTB said the company’s fourth-quarter results were “bad”, highlighting the accounting loss over impairments. “However, excluding these impacts, net profit was also below our expectations,” he added.
Telefonica’s board proposed a dividend for 2025 of 0.30 euros per share, unchanged from last year.
($1 = 0.9551 euros)
(Reporting by David Latona; Additional reporting by Emma Pinedo; Editing by Himani Sarkar, Mrigank Dhaniwala and Susan Fenton)
