Earnings reports show mixed results for Brazilian economic recovery

Brasília- DF. 08-10-2019- COMISSÃO DE MINAS E ENERGIA Presidente da Petrobras Roberto Castelo Branco fala sobre o Fechamento da Petrobras na Bahia e o desmonte da Petrobras no Nordeste. Foto Lula Marques

On October 28, some of the largest corporations in Brazil issued their earnings reports for the third quarter of 2020, representing an important snapshot of the country’s economic recovery after most Covid-19 social isolation rules were lifted. Here are the main takeaways:

Petrobras: the state-owned oil firm incurred losses of BRL 1.546 billion over the quarter, 43 percent less than the BRL 2.713 billion hit in Q2. This is the third consecutive quarterly loss for Petrobras, taking its total financial dip to BRL 52.7 billion since the beginning of the year. 

  • Performance was significantly affected by financial expenses, particularly a bond buyback. On the operational side, however, sales of oil derivatives rose by 18 percent in Brazil, while Brent oil prices surged 43 percent, causing a 39-percent spike in revenue versus Q2.  

Vale: profits for Brazil’s biggest mining company skyrocketed to USD 2.9 billion — 192 percent above Q2 and 76 percent above Q3 2019. The performance was boosted by a higher EBITDA and less provisions related to the disasters of Brumadinho and Mariana. The company was also helped by the recovery of production in the Southeast of Brazil and record-breaking levels in it’s mining network in the North region. 

Bradesco: the bank’s profit rose by 29 percent in comparison to Q2, to BRL 5.03 billion. However, the result was still 23 percent below Q3 2019 and under market expectations. Bradesco’s return on average equity (ROAE) — a financial ratio that measures the company profitability over its outstanding equity — rose by 3.3 percentage points to 15.2 percent. Another highlight was the fact that expenses on provisions fell by 37.1 percent, despite amounting to BRL 2.6 billion. 

Pão de Açúcar (GPA): the retailer’s earnings reports showed profit rising 151 percent versus 2019 levels, reaching BRL 386 million. The highlight was supermarket chain Assaí, which works with a hybrid model of retail and wholesale. The unit recorded revenues of BRL 10.1 billion, or BRL 2.5 billion above the same period last year. 

Ambev: Ambev’s revenues jumped 30 percent versus 2019 levels to BRL 15.6 billion. However, profit attributable to controllers fell by almost 9 percent, to BRL 2.27 billion. Analysts were excited about the gains of market share in Brazil, especially regarding the beer segment, where sales rose 25.4 percent versus 2019.

Usiminas: The steelmaker reversed losses and enjoyed a BRL 198 million profit. Steel and iron ore sales jumped by 54 percent and 21 percent, respectively, versus Q2 levels, leading to a 81 percent bump in revenues. In comparison to 2019, however, sales of steel and iron ore were 10 and 7 percent smaller — a drop that was offset by higher steel prices, which led revenues to grow by 14 percent on a yearly basis.