The Brazilian economy shrank 0.53% in the second quarter this year, compared to the same period last year, but it improved 0.23% in July on the previous month, and some companies now say they see the early signs of recovery.
German steelmaker ThyssenKrupp said Brazil may have already weathered the worst part of the recession but it is too soon to say if the economy is already on the mend.
“We see some sort of bottoming out there. But, whether we see a recovery, I think it’s a bit too early to say. We’re not heavily depending on the Brazilian market,” CFO Guido Kerkhoff told analysts in a conference call. “There are some signals so it could happen, although from very low levels.”
ThyssenKrupp’s steel sales in the Americas dropped 21% to €336m ($375m) at June 30, compared to the same period of 2015, due to market weakness in Brazil, the steelmaker said.
Brazil’s Petrobras said diesel sales rose slightly in Q2 this year, while demand for gasoline remained stable from the same period last year. The state-owned energy company said it expected to post a better performance in the second half.
Petrobras posted BRL71.3bn ($22.3bn) in sales revenues in Q2 this year, down from BRL79.9bn in the same period of 2015 but up from BRL70.3bn in Q1 this year. First half revenues dropped 8% year-on-year to BRL142bn, Petrobras said.
The energy company recorded BRL370m in net income in the second quarter, down 30% from the period last year but up from a loss of BRL1.25bn in the first quarter this year.
LATAM Airlines said demand for international flights from Brazil was improving but still had a long way to go to get back to pre-recession levels.
“With respect to international, we are still seeing weakness in Brazil, although in the last weeks the trend is starting to change,” Roberto Alvo, vice president of planning, management and research, told analysts.
Domestically, LATAM’s local business TAM has noticed a “timid” improvement of revenue in available seat kilometer (RASK), but it was too early to call a trend, TAM President Claudia Sender said. TAM reduced its capacity in the domestic market by 13.7% in Q2 this year.
LATAM posted a loss of $92.1m in Q2 this year, 85.2% wider than a $49.7m loss in the same period last year. Operating revenues dropped 12.5% year-on-year to $2.11bn in the second quarter as EBITDA fell 8% to $232m.
Brazilian food processing company Marfrig said it will focus on generating free cash flow in the second half of 2016 but it stopped short of revising its guidance for the year. “We expect better results… in the second half of the year,” CFO Eduardo de Oliveira Miron told analysts. “On top of that, I believe we will see the benefits of lower interest rates.”
Marfrig expected to reach BRL22bn to BRL24bn in revenues in 2016, after recording BRL10bn in revenues in the first six months of the year. It also expects to generate between BRL110m and BRL250m in free cash flow to shareholders for the year, following a negative result of BRL69m in the first half.