Telefónica Backs 2022 Outlook Despite "Challenging" Economic Conditions

By Scott Kanowsky 

Investing.com -- Telefónica (BME:TEF) reiterated its full-year financial guidance and dividend commitments despite facing headwinds from soaring inflation and slowing economic growth.

The Spanish telecom operator, which previously raised its outlook in the summer, backed its plan to deliver annual revenue in the "high-end of the low single digit growth" range and operating income before depreciation and amortization in the "mid-to-high-end of the low single digit" band.

Chairman and chief executive officer José María Álvarez-Pallete said the confirmation of its 2022 targets stemmed from the company's better-than-expected third quarter performance. Reported revenue during the three months to September accelerated by 11.2% compared to the same timeframe last year, while underlying operating earnings returned to growth at 8.5%.

Telefónica attributed some of this expansion to a recent weakening of the euro against the Brazilian real. Sales also jumped by 29% at its business in Brazil, while returns were solid elsewhere in Latin America.

Meanwhile, the firm said it would pay out its annual dividend of €0.30 per share in two tranches, with one in December and the other in June next year.

But Álvarez-Pallete warned that the company continues to battle a "very challenging" macroeconomic backdrop, particularly from inflationary pressures that have weighed on consumer spending and pushed up expenses.

"We are certainly not immune against these conditions, but we have a proven experience to successfully manage our business in this environment," he said.

Madrid-listed shares in Telefónica rose slightly in early trading on Friday.