Spanish giant Telefonica on Friday reported a sharp slide in profits in the first quarter of 2014, saying volatile Latin American exchange rates had battered its business. The global telecommunications group said its underlying performance, however, was actually improving. Net profit slumped 23.3 percent from a year earlier to 692 million euros ($957 million) in the three months to March 31, it said in a statement. Sales tumbled 13.5 percent to 12.23 billion euros. The foreign currency turmoil, especially depreciations of the Brazilian real, Argentine peso, and Venezuelan bolivar had effectively slashed revenue by 1.68 billion euros in the period, it said. Telefonica said its performance also took a hit because it had sold its Czech Republic unit, whose business activity was removed from the group accounts as of the start of 2014. The results revealed weakness, however, in Telefonica's business in Spain, where sales fell by more than eight percent, and in Germany, where they skidded by more than 11 percent. On an "organic basis" that strips out exchange rate swings, hyperinflation in Venezuela, asset sales and regulatory impacts, Telefonica said its revenue would have climbed 1.5 percent. "This solid organic performance is circumstantially affected in reported terms by the negative impact of exchange rate fluctuations and the disposal of certain assets," Telefonica executive chairman Cesar Alierta said. "At the same time, we continued to improve our financial flexibility," he said in a statement. Telefonica said it managed to cut net financial debt by 2.66 billion euros to 42.72 billion euros as of March this year.