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TELEFÓNICA: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 10.909 Bn (-12.0% vs. -12.4% expected and -12.8% expected by the market consensus);
EBITDA: € 3.732 Bn (+1.7% vs. -1.0% expected and -2.3% expected by the market consensus);
EBIT: € 1.471 Bn (+60.9% vs. +68.1% expected and +45.6% expected by the market consensus);
Net Profit: € 911.0 M (€ -202.0 M in FY2019 vs. € 756.0 M expected and € 624.0 M expected by the market consensus);
FY2020 vs. FY2019 Results
Sales: € 43.076 Bn (-11.0% vs. -11.1% expected and -11.2% expected by the market consensus);
EBITDA: € 14.481 Bn (-4.2% vs. -11.5% expected and -11.8% expected by the market consensus);
EBIT: € 4.139 Bn (-8.8% vs. -7.3% expected and -11.9% expected by the market consensus);
Net Profit: € 1.582 Bn (+38.5% vs. +25.0% expected and +13.4% expected by the market consensus);
Results came in above our expectations and those of the consensus (greater difference vs. consensus given the larger difference in all markets) at all levels. 4Q’20 Sales dropped -12% (-2% organic) with Spain falling -2.9%, Germany growing +2.7%, the UK dropping -9.5% (-5.2% organic), Brazil -30.1% (-1.6% organic), Infra growing +4.7% (+11% organic) and Hispam -20.4% (-2.5% organic). The 4Q’20 EBITDA grew +2.2% (-2.8% organic). FCF’20 totalled € 4.794 Bn, with € 1.993 Bn in the 4Q’20 (+13.2%), enabling a debt reduction of € 2.516 Bn in 2020 (-6.6% and € 1.449 Bn reduction in 4Q’20) to € 35.228 Bn (2.79x NFD/EBITDA). Including other inorganic initiatives (sale of Telxius and merger in the UK), NFD would be cut by additional € 9 Bn (to € 26 Bn), which would mean