Telefonica, the third-largest company in Spain by market value, said it made a net profit of 1.38 billion euros ($1.8 billion) in the third quarter, after posting a year-earlier loss of 429 million euros.

Sales dipped 1.6 percent to 15.54 billion euros.

Telefonica’s losses in the same quarter of 2011 had been caused in part by the high cost of a staff-reduction plan in Spain.

But the group’s ability to turn a profit in 2012 also hinged on its ability to shore up sales in Latin America to offset the impact of a biting recession in Spain and economic troubles elsewhere in Europe.

Over the first nine months of 2012 combined, Telefonica’s net profit surged 26.4 percent from a year earlier to 3.46 billion euros and revenues eased just 0.3 percent to 46.52 billion euros.

“Revenues in Latin America surpassed for the first time those from Europe and now represent 49 percent of the group total,” Telefonica said in a statement.

Investors welcomed the results, sending Telefonica shares up 1.22 percent to 10.34 euros in morning trade.

Telefonica managed to cut its debt by 2.3 billion euros in three months to a total 56 billion euros as of September 30, and said it had lopped off another 3.2 billion euros since then through asset sales and asset management.

The group, which had announced in July it was suspending dividend payments to shareholders, confirmed plans to distribute a payout of 0.75 euros a share in 2013.