25 Jul 2013 08:12
financial highlights
·; Revenues turned back to year-on-year organic growth in the second quarter:
® Revenues totalled 14,421 million euros in the second quarter of the year, up 0.5% year-on-year in organic terms, with strong acceleration in Latin America (+10.4% year-on-year) and improving trends in Europe. Latin America accounted for 51% of consolidated revenues.
® Revenues in the first half of 2013 amounted to 28,563 million (-0.5% year-on-year in organic terms), and continued to reflect, in reported terms, the impact of exchange rate fluctuations (-5.5 percentage points) and the changes in the perimeter of consolidation (-1.8 percentage points).
® Excluding the negative impact of regulation, revenues would have grown by 1.0% organic year-on-year, accelerating its growth in the second quarter up to 2.1%.
·; OIBDA totalled 4,854 million euros in the second quarter (-0.7% year-on-year in organic terms):
® OIBDA for the first half of the year amounted to 9,421 million euros, remaining virtually unchangedyear-on-year (-0.4% organic).
® Consolidated OIBDA margin remained stable year-on-year in the first half of the year (-0.4 percentage points in the quarter), reflecting both the increased commercial activity and the ongoing execution of the Company's efficiency measures.
·; Operating cash flow (OIBDA-CapEx) amounted to 5,518 million euros in the first half of the year (+3.4% year-on-year in organic terms).
·; Basic earnings per share stood at 0.46 euros in the first half of 2013 (0.25 euros in the second quarter).
® Net income totalled 2,056 million euros, 0.9% lower than in first half of 2012 (1,154 million euros in the second quarter, -13.1% year-on-year).
·; Free cash flow totalled 1,451 million euros at June (1,908 million euros in the second quarter) and includes spectrum payments of 1,110 million.
·; Net debt stood at 49,793 million euros at June while the leverage ratio stood at 2.40 times.
® Including post-closing asset portfolio transactions (disposal of T. Ireland, Inversis and 40% of Central America), net debt would have been reduced by further 1.179 million euros, to 48,614 million euros (leverage ratio of 2.36 times), implying a debt reduction close to 10 billion euros since June 2012.
·; First-half results are in line with the Company's internal estimates allowing to reiterate the financial and operating targets for 2013.
·; Progressive stabilisation in our key markets continued:
® In Spain, sales improved and total revenues (fixed + mobile), excluding handset sales, fell 10.4%year-on-year in the quarter (-10.9% in the first half of the year). At the same time, deep progress in the execution of the transformation programme resulted in a higher operating leverage. The OIBDA margin in the quarter stood at 48.4% (+3.6 percentage points year-on-year in organic terms) and at 47.7% in the first half (+4.0 percentage points in organic terms). The improvement in efficiency levels is also reflected in the operating cash flow (OIBDA - CapEx) performance, which totalled 2,502 million in the first half (+0.2% year-on-year in organic terms).
® In Brazil, VIVO strengthened its market position and the contract mobile accesses increased 20%year-on-year driven by strong demand for smartphones (+101% year-on-year). The fixed business saw a change in the commercial activity trend as fixed broadband net adds stood at 84 thousand in the quarter. Thus, revenues increased 3.1% year-on-year in the quarter in local currency (+3.0% in the first six months) to 3,167 million euros (+4.8% in the quarter excluding regulatory impacts). The OIBDA margin was 32.1% in the quarter, impacted by the intense commercial activity in the high value customers (32.2% in the first half of the year).
® In the UK the gradual improvement of the business continued, which along with the success of the new tariffs launched during the quarter ("O2 Refresh"), resulted in a sustained commercial intensity. Therefore, mobile service revenues improved its year-on-year trend for the third quarter in a row and fell 0.9%year-on-year in the second quarter excluding regulatory impacts (-1.9% in the first half). OIBDA amounted to 419 million euros in the quarter (757 million in the first six months of the year), and the margin reached 25.8% in the second quarter (23.4% in the first half), although it is affected by exceptional items (capital gain of 73 million euros for the sale of the fixed business assets in the second quarter and 48 million euros in restructuring costs, out of which 40 million euros corresponded to the second quarter).
Comments from César Alierta, Executive Chairman:
"We have achieved significant progress in the execution of our transformation process during the second quarter of 2013 which is starting to reflect in an improved performance of both our operational and financial metrics. The quarter shows a clear intensification of the commercial activity, especially in high value segments, driven by a robust demand in mobile data, resulting in a strong growth of smartphones, and ultra-broadband (fiber, VDSL).
The intense commercial activity also yields a strong acceleration of revenue which returns to organic growth in the second quarter and is driven by double-digit growth in Latin America and the improvement of the business in Europe. The on-going implementation of the transformation process has allowed us to achieve significant efficiency gains, which we have reinvested in strengthening growth. Despite the higher commercial activity, we were able to maintain margins virtually stable.
Additionally, during this quarter we have made significant progress in the process of improving our financial flexibility. An intensive management activity of the asset portfolio complemented by a cash generation of close to 2 billion euros in the quarter has allowed us to reduce our net debt by 10 billion euros since June 2012.
Both the evolution of the business and our financial performance has placed us in a position of strength from which we announced the agreement to acquire KPN's German subsidiary, E-Plus, by Telefónica Deutschland to create a leading operator in the largest European market. This is clearly an operation which makes great strategic sense and that will generate significant benefits for consumers, society and our shareholders."
TELEFÓNICA | |||||||||
SELECTED FINANCIAL DATA | |||||||||
Unaudited figures (Euros in millions) | |||||||||
January-June | %Chg | April-June | %Chg | ||||||
2013 | Reported | Organic | 2013 | Reported | Organic | ||||
Revenues | 28,563 | (7.8) | (0.5) | 14,421 | (6.8) | 0.5 | |||
Telefónica Latin America | 14,682 | (1.9) | 8.6 | 7,451 | 0.1 | 10.4 | |||
Telefónica Europe | 13,392 | (11.2) | (9.7) | 6,717 | (10.7) | (8.8) | |||
Other companies & eliminations | 488 | (47.9) | 253 | (49.4) | |||||
OIBDA | 9,421 | (9.7) | (0.4) | 4,854 | (9.3) | (0.7) | |||
Telefónica Latin America | 4,646 | (10.9) | 5.1 | 2,341 | (12.1) | 2.7 | |||
Telefónica Europe | 4,864 | (6.0) | (4.5) | 2,516 | (5.7) | (4.1) | |||
Other companies & eliminations | (88) | c.s. | (3) | c.s. | |||||
OIBDA margin | 33.0% | (0.7 p.p.) | 0.0 p.p. | 33.7% | (0.9 p.p.) | (0.4 p.p.) | |||
Telefónica Latin America | 31.6% | (3.2 p.p.) | (1.0 p.p.) | 31.4% | (4.4 p.p.) | (2.3 p.p.) | |||
Telefónica Europe | 36.3% | 2.0 p.p. | 2.0 p.p. | 37.4% | 2.0 p.p. | 1.8 p.p. | |||
Operating Income (OI) | 4,316 | (18.6) | (5.4) | 2,250 | (19.3) | (7.7) | |||
Telefónica Latin America | 2,136 | (21.8) | 0.9 | 1,058 | (25.6) | (5.1) | |||
Telefónica Europe | 2,394 | (10.6) | (8.7) | 1,265 | (11.0) | (9.3) | |||
Other companies & eliminations | (213) | 96.3 | (73) | 34.0 | |||||
Net income | 2,056 | (0.9) | 1,154 | (13.1) | |||||
Basic earnings per share (euros) | 0.46 | (0.7) | 0.25 | (13.8) | |||||
CapEx | 3,903 | 6.7 | (7.6) | 1,962 | 0.9 | 2.8 | |||
Telefónica Latin America | 1,716 | (10.2) | 2.0 | 1,091 | 8.6 | 22.9 | |||
Telefónica Europe | 2,115 | 35.4 | (13.7) | 829 | 1.1 | (11.1) | |||
Other companies & eliminations | 72 | (61.0) | 43 | (64.7) | |||||
OpCF (OIBDA-CapEx) | 5,518 | (18.5) | 3.4 | 2,891 | (15.1) | (2.7) | |||
Telefónica Latin America | 2,930 | (11.3) | 6.9 | 1,251 | (24.6) | (9.6) | |||
Telefónica Europe | 2,749 | (23.9) | (0.5) | 1,687 | (8.7) | (1.1) | |||
Other companies & eliminations | (160) | 14.4 | (46) | (54.7) | |||||
- Reconciliation included in the excel spreadsheets. | |||||||||
Notes: | |||||||||
- OIBDA and OI are presented before brand fees and management fees. | |||||||||
- OIBDA margin calculated as OIBDA over revenues. | |||||||||
- 2012 and 2013 reported figures include the hyperinflationary adjustments in Venezuela in both years. | |||||||||
- Other companies & eliminations include the results of Atento in the first quarter of 2012. | |||||||||
- CapEx includes 834 million euros from the spectrum acquired in the first half of 2013: 671 million euros in United Kingdom and 24 million euros in Uruguay in the first quarter, 65 million euros in Spain, 47 million euros in United Kingdom and 28 million euros in Brazil in the second quarter. In the first half of 2012 it includes 5 million euros from the spectrum acquired in Nicaragua and 1 million euros from the spectrum acquired in Ireland in the first quarter. | |||||||||
- From January 1st, 2013, Tuenti is included in the consolidation perimeter of T. España. Before it was included within "Other companies and eliminations" of Telefónica Group. As a consequence, the results of T. España, T. Europe and "Other companies and Eliminations" of Telefónica Group have been restated for the fiscal year 2012. As this is an intragroup change, Telefónica consolidated results for 2012 are not affected. | |||||||||
- Organic growth / 2013 guidance: Assumes constant exchange rates as of 2012 (average Fx in 2012), excludes hyperinflationary accounting in Venezuela in both years and considers constant perimeter of consolidation. In OIBDA and OI terms excludes write-downs, capital gains/losses from companies' disposals, tower sales and material non-recurring impacts. CapEx excludes spectrum acquisition. 2012 adjusted bases exclude: capital gains/losses from companies' disposals (capital gains/losses from China Unicom, Atento, Hispasat and Rumbo), impairment of T. Ireland, homogeneous perimeter (2012 adjusted figures exclude results of Atento, Rumbo and small changes in T. Digital perimeter and homogeneous accounting treatment of Joint Ventures) tower sales and change in contractual commercial model for contract handsets in Chile. | |||||||||
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