São Paulo – This week’s corporate news highlights earnings season, with more than a hundred balance sheets released in the period.
The food industry company Dias Branco reported, last Friday evening, that it recorded a net profit of 142.3 million Brazilian riyals in the second quarter of 2021, which represents a decrease of 6.6% compared to the same period last year.
After the market closes on Monday (9), pay attention to the results of Blau, BR Partners, Direcional, Iguatemi, Minerva, Mobly, Even, Fras-le, Itaúsa, Melnick, Miter and São Martinho.
Monday marks Viveo’s first stock offering.
In the commodities market, today is a strong bearish day for iron ore and oil. Oil is down about 4%, with investors worried about lower fuel demand if variable deltas prevent economies from reopening.
“Future novel coronavirus waves pose a significant risk to our forecast for Brent crude, which now averages at $68 per barrel in 2022 and $63 per barrel in 2023. We remain comfortable with our estimates, despite the spread of variable delta,” notes BBI.
Iron ore also saw a strong decline, amid expectations of increased supply and slowing demand in China. The most-traded iron ore contract on the Dalian Commodity Exchange, for delivery in January 2022, closed 4.4% lower at CNY852.50 ($131.67) a ton, after touching a minimum of 845 yuan – the lowest level since April 1.
“With blast furnace production expected to decline in the second half of 2021 compared to the first, and iron ore shipments from Australia and Brazil recovering, we maintain our range of $140 to $170/ton for iron ore. (CFR China) over the medium term Attila Wednell, managing director of Navigate Commodities in Singapore, told Reuters.
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m days white (MDIA3)
a Food industry Dias Branco recorded a net income of R$ 142.3 million in the second quarter of 2021, Which represents a decline of 6.6% compared to the same period last year, according to information released by the company on Friday (6).
The company’s total EBITDA was R$167.2 million, down 25.9% from the value of the second quarter of 2020.
Finally, net revenue was R$1.979 billion, an increase of 5% year-over-year.
Sales volume reached 450 thousand tons, down from 536 thousand tons sold in the period from April to June of last year.
According to the administration, the second quarter of last year was marked by a temporary and atypical increase in demand, driven by emergency aid and increased in-home consumption, creating a “more difficult basis for comparison” for the second quarter of 2021.
Regarding Ebitda, the administration argues that the decline is “due to an increase in dollar-denominated commodities, lower volumes and an unfavorable exchange rate effect.”
Itaú BBA evaluated the results published by M. Dias Branco as impartial. The company reported an Ebitda adjustment of R$147 million, compared to an estimate of R$134 million and market consensus of R$108 million. Most of the higher than expected results are due to larger volumes and higher than expected price elasticity. But the bank notes Ebitda’s margin of 7%, down 4.5 percentage points in the year-on-year comparison, in line with Itaú’s forecast.
The bank highlights a liquidity burn of R$96 million, with a ratio between net debt and Ebitda 0.5 times, stable compared to the first quarter. The bank notes that the company has announced a bond buyback program that could potentially have up to 10% of its shares available to investors. The bank maintains a market performance assessment (valuation perspective within the market average) and a target price of R$30 for 2021, compared to a price of R$33.35 on Friday.
Bradesco BBI highlighted that Ebitda’s adjusted rate was 20% above consensus and 24% above analyst estimates, mainly due to overhead, sales and administrative expenses, which were 18% lower than the bank’s estimate and accounted for 24% of total sales (versus estimates BBI rose 27% in Q221, which is also the bank’s long-term assumption), given the greater benefit from efficiency measures.
However, while a market share loss of 2.6 pts y/y for cookies and 3.6 pts yoy for pasta is something to watch, it improved sequentially during the quarter (up from 0 0.7 pts for cookies in June vs. for pasta in May-June vs. March-April), which may indicate that competitors are following M. Dias price increases (+25% on base)
Analysts find the multiples attractive. In addition, we expect a decline in commodity prices
Agricultural production during the second half of 2021-2024, which represents approximately 65% of the company’s total costs, will result in net income in 2022-2024 for M. Dias averaging 35% above consensus,” according to analysts pointing out.
The session marked the debut of Viveo’s stock. The medical products distributor Thursday priced its initial public offering (IPO) at R$19.92 per share. The shares will be traded under the symbol “VVEO3”.
United Nations Governing Council Approved the twenty-first issue of the simple bond, non-convertible into shares amounting to R$1.1 billion. The bonds will be in one series, unsecured, with an additional 10-year term. There is a possibility that the amount of 1.1 million bonds will increase by 20%.
Smart Fit (SMFT3)
SmartFit has announced the purchase of 100% of the Smartex School of Gymnastics and Dance. “The company is responsible for operating 34 SmartFit gyms across the country,” Gym Network said in a statement to the market.
Two sources close to the negotiations said: A fund with payments from state-owned environmental fines will pay for the social assistance announced by President Jair Bolsonaro.
Palácio do Planalto commissioned studies to reduce the cost of cooking gas, an essential ingredient for the population, after the value of the Petrobras product to distributors increased by about 1 R$ per kilo per year to 3.60 R$ per kilo. In 2021, the product is up 37.5% and 40% in places like Paulínia (SP) and Duque de Caxias (RJ), according to data from Petrobras, which has agreed to six consecutive increases this year, following a rebound in oil prices.
Petrobras also reported on Monday that it has appointed JPMorgan as an advisor to sell its stake in petrochemical company Braschem (BRKM5). The company confirmed a Reuters report published last Thursday, based on three sources familiar with the matter.
“The company confirms that it has engaged JPMorgan to obtain financial advice on the final and future transaction related to its participation in Braskem,” Petrobras said.
On Thursday morning, Petrobras executives said on a conference call with investors that they had appointed advisors to sell their stake in Braskem, without giving further details. The Novonor Group, formerly known as Odebrecht, resumed the sale of Braskem’s ownership in April, but has not yet found a buyer.
Eletrobras reported on Friday that the Curuá-Una hydroelectric power plant, whose concession belongs to subsidiary Eletronorte, is included in the company’s privatization process and must be subject to a new electricity generation grant.
However, according to a statement published by the state-owned company, there will be, in the calculation of the operation, the added value that Eletrobras will pay for the new concessions. The asset is located in Pará and has 30.3 megawatts of installed capacity.
Carrefour Brazil (CRFB3)
Carrefour Brasil reported on Friday that its board of directors has elected Marco Aparecido de Oliveira as head of its Atacadao unit.
Oliveira has already shared leadership of the division over the past two years with Roberto Mosnic, who will remain in the group until the end of this year. After that, Carrefour will support Brazil in “strategic reflections until June 2024,” the company said, without giving further details.
“We see the news as neutral, as both executives have extensive experience in the sector and a proven track record of delivering results for the company,” XP highlights.
Notre Dame Intermedica (GNDI3)
Notre Dame Intermédica reported on Friday that it had received approval to provide dental care services to public employees in Belo Horizonte, effective December 1. According to the company, about 20,000 employees in the state capital of Minas Gerais have chosen to hire a health plan through the membership method.
On Friday, BRF announced an investment of R$171 million in operation in Rio Grande do Sul, while the company’s integrated producers in the state are also to allocate a total of R$181 million in their structures to increase capacity and modernize facilities.
According to a statement, the BRF’s contribution will be directed to the modernization and expansion of production units in Marao, Serafina Corre and Lajedo, as well as a new feed plant in Jorama.
Gerdao announced on Friday that it will invest R$6 billion in Minas Gerais over the next five years in increasing production capacity for rolled products and in other initiatives including energy. Company executives had already notified on Wednesday that the company would install a new hot-rolled coil mill at the Oro Branco mill, with a capacity of 1,000 tons per year, as well as a new structural forming machine with a capacity of 500,000 tons.
Bradesco BBI commented on data from CCR, whose toll road portfolio performed stable in July compared to the same period in 2019, up 2.9 percentage points from the previous week. Traffic in urban concessions was down 41% compared to 2019 and 0.5 percentage point compared to the week, and traffic at airport concessions was down 38% compared to 2019 and 0.1 percentage point compared to the immediately prior week.
Red Door (RDOR3)
Itaú BBA kicked off the Rede D’Or coverage, with a superior valuation and a target price for 2022 of R$88. The bank says that the company has practically all the factors important to lead the wave of consolidation in the sector.
Credit Suisse spoke with Ambev CEO Jean Jereissati and Chief Financial Officer Lucas Lira after the release of second-quarter results. The bank says the sector is producing 20% less than pre-pandemic levels. The Bank estimates that prices are still favorable for the management to manage the prices of raw materials. There was a 12% increase in price formation in the first half, due in part to price increases in the third and fourth quarters of 2020 and lower discounts.
The bank says it expects Ambev prices to remain strong in the second half after rising in June and believes that upcoming quarters should point to a rebound in margins. Credit maintains a superior rating (the valuation perspective is above the market average) and a target price of R$21.50.
(with Reuters and Estadão content)
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