Exports offer a ray of hope for Brazil's consumer goods makers
By Brad Haynes
SAO PAULO Aug 13 (Reuters) - From cigarettes to lipstick to sandals, exports have emerged as a silver lining for Brazilian consumer goods companies that are suffering the worst domestic slump in over a decade.
With Brazil's currency, the real, at a 12-year low, foreign sales have kept several companies in the black, helping them outperform rivals focused on the local market, according to a Reuters analysis of second-quarter earnings.
Shoemaker Alpargatas SA, cosmetics firm Natura SA and tobacco producer Souza Cruz SA all relied on surging revenue abroad last quarter to offset flat or slipping Brazilian sales.
Their success bolsters hopes that Brazil can diversify beyond the raw materials that now dominate exports, restoring manufacturing competitiveness and opening one of the world's most closed economies.
To expand on gains, the companies must fight mounting supply chain inflation and strengthen foreign commercial ties that withered during a decade-long domestic boom, say analysts and industry groups.
"The only companies that have been able to benefit are those that already had a track record abroad," said Guilherme Moura Brasil, an analyst at the Banco Fator brokerage who covers Alpargatas and rival shoemaker Grendene SA.
In total, 15 companies on the Sao Paulo stock exchange's Consumer index have reported foreign revenue in their latest earnings. That is less than half the index. Their combined operating profit, measured by earnings before interest, taxes, depreciation and amortization (EBITDA), rose nearly 20 percent from a year earlier.
At the 16 other companies on the index that have reported earnings so far this season, EBITDA fell about 10 percent. Six other companies on the index have not yet reported earnings for the quarter. Continuación...