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SAO PAULO, Jan 28 (Reuters) - Cielo SA, Brazil's largest card payment processor, missed fourth-quarter profit estimates on Wednesday as expenses spiked and transaction volume growth began to show the impact of weak consumer confidence in Latin America's largest economy.
In a securities filing, Cielo said that net income totaled 805.6 million reais ($312.8 million) in the quarter, below the 820 million reais estimate in a Reuters poll of six analysts. Profit fell 1.8 percent on a sequential basis, the second such decline in the past three quarter.
Profit rose 11.5 percent from the year-ago period.
Cielo took advantage of increasing merchant discount rates to raise revenue as the use of debit and credit cards rose at a slower pace. A bigger-than-expected 34.5 percent jump in sales, general and administrative expenses weighed on margins, as it did in prior quarters.
Management will discuss the earnings in a conference call with investors early on Thursday. Chief Executive Officer Rômulo Dias is expected to explain his plans to cut expenses and integrate a 70 percent stake purchase of a card joint venture with Banco do Brasil SA.
In a separate filing, management at Cielo will put forward a proposal to shareholders to set aside 1.776 billion reais for capital spending this year. The plan will be 40 percent-funded with retained earnings, the filing said.
Net revenue rose 9.8 percent to 2.13 billion reais, below the poll's estimate of 10.9 percent as credit card volumes disappointed. The earnings were bolstered by 517 million reais in prepayment revenues, the filing said.
Sales, general and administrative expenses rose to 412.4 million reais, above the poll's estimate of 393 million reais. While part of the jump was related to seasonal activity during the year-end holiday season, increased spending related to the creation of the Banco do Brasil venture and other investments also contributed.
As a result, quarterly earnings before interest, tax, depreciation and amortization, a gauge of operational profits known as EBITDA, fell 3.4 percent to 925 million reais, the filing said. The poll estimated a decline of 1.4 percent in EBITDA.
The Barueri, Brazil-based company's EBITDA margin tumbled to 43.4 percent of revenue, slightly below the poll's 43.8 percent.
$1 = 2.5757 Brazilian reais Reporting by Guillermo Parra-Bernal and Aluísio Alves; Editing by Christian Plumb