(Adds comments, details on fourth-quarter financial results)
By Guillermo Parra-Bernal
SAO PAULO, March 5 (Reuters) - Cetip SA Mercados Organizados will raise dividend payouts and buy back stock this year, as mounting risk aversion and flagging capital markets activity are weighing down shares in Brazil’s largest securities clearinghouse.
The board of São Paulo-based Cetip will propose raising payouts to the equivalent of 85 percent of annual net income, from a prior 75 percent, a securities filing said on Thursday. Shareholder will vote on the proposal in April.
The company also plans to repurchase 5.4 million shares, or 2.13 percent of outstanding stock, through March 3, 2016 to “maximize value for shareholders through a more efficient capital structure,” the filing added. The plan will cost 184.4 million reais ($61.3 million), based on Cetip’s closing price on Thursday.
Shares are down about 1 percent since the start of February.
Both initiatives stem from Chief Executive Officer Gilson Finkelsztain’s plan to make the best use of Cetip’s capital. His efforts to bring in new products and improve client relationships are helping Cetip cope with recent market turbulence.
Fourth-quarter net income came in at 117.6 million reais, in line with a Reuters poll forecast of 118 million reais, Cetip said in a separate filing. A seasonal surge in expenses offset the impact of record net revenue and lower debt-servicing expenses in the quarter.
Analysts expect Cetip and other market infrastructure companies to struggle as Brazil flirts with its worst recession in two decades. Chief Financial Officer Willy Otto Jordan told Reuters in an interview that Cetip has an opportunity to create products to protect clients against a downturn.
Revenue at the securities unit came in line with the poll, as investors sought protection for their fixed-income investments. Revenue at the loan liens segment recovered, topping the poll’s forecast.
Expenses rose 15 percent on a quarterly basis to 112 million reais, well above the poll’s forecast of 97 million reais.
That drove earnings before interest, tax, depreciation and amortization to 185 million reais, below the poll’s 191 million reais forecast. The indicator, a gauge of operational profit known as EBITDA, fell 1 percent on a quarterly basis.
Management will discuss fourth-quarter earnings with investors at a conference call on Friday.
$1 = 3.003 Brazilian reais Reporting by Guillermo Parra-Bernal; Editing by Ken Wills and Lisa Shumaker