(Adds details on earnings, shares, analyst comment)
By Rosalba O‘Brien
SANTIAGO, Aug 28 (Reuters) - Chile-based retailer Cencosud said it had adjusted its forecast income for Brazil and written off goodwill for its assets there as the nation’s economy has deteriorated.
The write-off amounted to nearly 117 billion Chilean pesos ($169 million) before tax, the company said on Friday as it released second-quarter results.
“Despite the improvement shown in the (earnings) generation in the country, the overall deterioration of market conditions and indicators experienced in Brazil prompted the company to take action,” said the owner of retailers GBarbosa and Prezunic.
Cencosud, which owns supermarkets, home improvement chains, and department stores in Chile, Peru, Argentina, Colombia as well as Brazil, said the write-off would not affect its cash flow or ability to comply with credit agreements, but dividends could be limited in 2015.
To shore up profits, the company said it was cutting jobs, working capital and third-party agreements, which led to a one-time charge of 15 billion pesos.
The charges were partly offset by income from a previously announced deal on its credit card business with Bank of Nova Scotia.
Cencosud reported a second-quarter net profit of 51 billion pesos, lower than the 80 billion expected in a Reuters poll of analysts.
Excluding special items, core earnings increased 20 percent, with related margins up 102 basis points.
“If this one-off was excluded, the results would have been very good,” said Santander analyst Nicolas Villarreal, who has a “buy” rating on the stock.
“Even though the macroeconomic scenario continues to be very tough throughout the region, especially in Brazil, they’ve been able to improve margins,” he said.
Santiago-listed shares in the company, which had fallen about 10 percent this year as of Thursday’s close, were up 1.5 percent on Friday, while its Nasdaq-listed ADRs fell 2.9 percent.
$1 = 691.8300 Chilean pesos Additional reporting by Gram Slattery; Editing by Chizu Nomiyama and Lisa Von Ahn