Category: Brazil

Brazilian long-distance carrier Embratel, controlled by Mexico’s telecoms giant Telmex, posted a net profit of $16.6 million for the first quarter, up from $1.8 million a year earlier. The company’s EBITDA totaled $178.4 million, up 4% year-on-year. Embratel attributed its positive results to a weaker US dollar and lower operating costs.

Ipiranga, Brazil’s second-largest oil company, shut down an unprofitable refinery, saying it was unable to compete with state-owned Petrobras. Ipiranga has been hurt by the government’s efforts to control inflation by slowing fuel price increases charged by Petrobras, which controls 98% of the market in Brazil, even as crude oil prices have climbed to record highs. Petrobras has raised fuel prices 18% since January 2004, while crude oil prices have climbed more than 50%.

Landless peasants invaded the Brazil’s Finance Ministry headquarters Friday, occupying it for six hours to press the government to free up more money for land reform, investment and jobs. The protesters left after negotiating with the police. The peasant groups, which are usually allied with President Luiz Inacio Lula da Silva, say Palocci is holding up funds that should be used for land reform and settlement of rural families.

The World Trade Organization eliminated Brazil’s Luiz Felipe de Seixas Correa from the running to be its next director-general, saying that European Union candidate Pascal Lamy leads the race for the position. The other candidates are Uruguay’s Carlos Perez del Castillo and Mauritian Foreign Minister Jaya Cuttaree. The decision on who will succeed Supachai Panitchpakdi for the four-year post must be made by consensus before June.

Brazil’s retail sales rose 1.3 percent in February, the slowest pace in 15 months, adding to evidence that South America’s biggest economy is starting to weaken after seven interest-rate increases by the central bank. Retail sales rose 1.3 percent year-on year in February after increasing 6.2 percent in January and 11.4 percent in December. Brazil’s central bank will meet next week to decide if it will leave the benchmark rate unchanged at 19.25 percent.

Brazil’s no-frills airline Gol Linhas Aereas Inteligentes reported first quarter revenue of $225 million, a 36% increase from the same period of 2004. The company’s revenue per seat kilometer rose 6.9% to $8.24. Gol, which started operations in early 2001, became a publicly traded company last year.

Brazilian iron ore giant Companhia Vale do Rio Doce, the world’s largest iron-ore producer, plans to invest $6.2 billion over the next five years to meet rising demand from China. The company is looking to add 140 million metric tons of capacity by 2010, accounting for 37% of global demand. China, the world’s biggest steelmaker, may increase iron-ore imports by 15% this year to 240 million tons.

Brazil’s troubled airline Varig registered net revenue of $3.4 billion in 2004, up 11 percent year-on-year. The company reduced its net loss 95 percent to $34 million, while gross profit totaled $980 million, up 10 percent. Varig finished 2004 with debts worth $2.2 billion, most of which are owed to the Brazilian government.

The International Monetary Fund raised its growth forecasts this year for Mexico and Brazil, predicting that both countries’ economies will expand 3.7 percent, more than the previous 3.2 percent forecast for Mexico and 3.5 percent outlook for Brazil. The IMF called on Latin American countries to take advantage of the economic expansion in the region to reduce debt and broaden the tax collection base to help keep budget deficits under control.

Brazilian Finance Minister Antonio Palocci was in a self-confident mood this week. In a swing through New York, he told investors, bankers and business leaders that “For years we talked about crises. Next year we will be talking about the continuation of long-term growth, we won’t be using the word ‘crisis’.”

Palocci said Brazil is better situated to handle volatility now that it has inflation in check, and slashed the government’s dollar-linked debt. Henrique Meirelles, Central Bank governor, defended his tough stance on inflation – he has pushed short-term interest rates to 19.25% – by underlining how lower inflation contributes to lower interest rates in the long term. Joaquim Levy, treasury secretary, echoed Meirelles when he underscored the importance of sustainable growth. “Reducing fiscal risk is task number one and reducing the size of our debt is the way of achieving that,” he said. Levy highlighted the rising level of domestic savings in Brazil as a “degree of protection that is very important if the external environment changes.” Levy pointed to the buoyancy in Brazil’s primary equity markets and the number of initial public offerings as evidence of the higher degree of confidence. Palocci and Levy said growth is starting to benefit lower-income groups through job creation and through improved access to the banking system.