UPDATE 1-Brazil's Cetip posts record profit on revenue; debt expenses soar
(Adds details on revenue, debt expenses, EBITDA)
By Guillermo Parra-Bernal
SAO PAULO Nov 6 (Reuters) - Brazil's Cetip SA Mercados Organizados's profit hit a record in the third quarter, in line with estimates, as clearing and custody revenues weathered market volatility and a recovery in car sales bolstered results in the company's loan liens unit.
Cetip, Latin America's largest securities clearinghouse, earned 108.1 million reais ($42.1 million) during the quarter, according to a securities filing published late on Thursday. The result was slightly below the average estimate of 109 million reais in a Reuters poll of five analysts.
Profit rose 8.7 percent from the previous and 15.7 percent on a quarterly basis, it said. An unexpected jump in servicing costs stemming from Cetip's efforts to cut debt curbed profit gains in the quarter, the filing showed.
The results underscore the success of Chief Executive Officer Gilson Finkelsztain's strategy to bring in new products and services to assuage competition risks and help improve Cetip's relationship with banks, the company's largest clients. Management will discuss earnings at a conference call on Friday.
The strategy is helping São Paulo-based Cetip stave off the impact of market turbulence in Brazil this year. Concern over a weaker economy and economic-policy missteps led to reduced financial-market inflows and rising price volatility in the bond and derivatives markets, where Cetip operates as a clearinghouse and a depositary company.
Earnings before interest, taxes, depreciation and amortization, an indicator of profitability in core operations known as EBITDA, rose to 186 million reais, above the poll's 177 million reais estimate.
EBITDA rose to 72 percent of revenue, compared with an EBITDA margin of 70.7 percent in the second quarter. Continuación...