Spain's Telefonica posts lower profits
Spanish telecoms giant Telefonica Thursday reported net profits tumbled 16.2 percent in the first half to 3.162 billion euros ($4.45 billion) due in part to a writedown in the value of its stake in Telecom Italia.
But Telefonica, the second biggest telecommunications operator in Europe behind Britain's Vodafone, recorded strong growth in its Latin American operations, in particular in Brazil.
It decided in April to shed 6,500 employees in crisis-hit Spain over the next three years due to the declining revenues at home.
Revenues were up 6.3 percent at 30.886 billion euros, due to "growth of sale in Telefonica Latinoamerica," which represents 46 percent of total, it said.
In the second quarter alone, profits were down 27.4 percent from the same period last year, at 1.538 billion euros.
The group in particular blamed the downward revaluation of its stake in Telecom Italia which reduced profits by 353 million euros over the six months.
Operating income before depreciation and amortization (OIBDA) was up 3.7 percent at 11.304 billion euros, mainly on growth in Latin America and Europe.
In Spain, OIBDA was down 10.6 percent at 3.911 billion euros while Latin America it was up 16.6 percent at 5.190 billion euros and in Europe it rose 1.2 percent to 2.097 billion euros.
On the Madrid stock market, Telefonica shares lost 0.45 percent Thursday morning, in a market that was up 0.39 percent.
The planned job cuts in Spain are expected to cost the company 2.7 billion euros.
Finance Minister Elena Salgado had expressed astonishment over the planned layoffs at a profitable company as Spain struggles with an unemployment rate of more than 21 percent.
The employees represent about 20 percent of the workforce of Telefonica in Spain, where the group has about 30,000 staff out of a total global workforce of 269,000 people.
The group posted a record net profit of 10.2 billion euros in 2010, up nearly 31 percent as weakness in Spain was offset by strong growth in the rest of Europe and Latin America.
© 2011 AFP