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By Ana Mano
SAO PAULO, Aug 12 (Reuters) - Kroton Educacional SA beat second-quarter profit estimates on Friday after Brazil’s largest for-profit education company reined in payroll costs and expenses to offset declining revenue.
Belo Horizonte, Brazil-based Kroton earned net income of 519 million reais ($165 million) in the quarter, beating analyst consensus estimate of 465 million reais. Profit jumped almost 25 percent from a year earlier, but fell 13 percent from the prior three months.
Costs slipped 4.4 percent while operating expenses fell 24 percent in the quarter, reflecting Chief Executive Officer Rodrigo Galindo’s efforts to streamline a company with almost 1 million students. The resumption of government student loan subsidies through the Fies program bolstered cash generation in the quarter, Kroton said in a statement.
Cash from operations netted 613 million reais last quarter, around the same level as a year earlier, when the government, struggling with a surge in the budget deficit, decided to slow payments on the program.
The results are the first since Kroton agreed to take over smaller rival Estácio Participações SA, in a deal that could transform the combined entity into the world’s largest for-profit college operator.
Kroton’s common shares rose 0.7 percent in early Friday trading to 15.38 reais in São Paulo. Management is expected to discuss second-quarter results later in the day.
Earnings before interest, tax, debt and amortization, a measure of operating profitability known as EBITDA, came in at 659 million reais, above a consensus estimate of 582 million reais.
$1 = 3.1392 Brazilian reais Reporting by Ana Mano; Additional reporting by Tatiana Bautzer in São Paulo; Editing by Chizu Nomiyama and Phil Berlowitz