UPDATE 1-Brazil's Cielo sees costs per transaction easing next year

miércoles 30 de julio de 2014 12:06 GYT

(Adds details, context, comments from CEO Dias, share performance)

By Guillermo Parra-Bernal

SAO PAULO, July 30 (Reuters) - Cielo SA, Brazil's largest card payment processor, expects still-robust volume growth and technology investments to help bring down costs per transaction next year, following a recent spike, executives said on Wednesday.

But shares of Cielo fell 2.6 percent to 43.10 reais, their biggest intraday tumble in more than two weeks, after its CEO did not lower the unit cost estimate for this year.

On a conference call to discuss second-quarter results, Chief Executive Officer Rômulo Dias said Cielo still expected unit transaction costs of 0.75 reais to 0.78 reais this year, but he expects them to end next year below that range.

"That's doable, that the actual number next year ends up slightly below our soft guidance for this year," he said.

Cielo's struggle with a surge in costs and expenses was the main reason the Barueri, Brazil, company missed second-quarter profit estimates on Tuesday. It is investing heavily in information technology, coping with rising wages and starting new projects to preserve its leadership in Brazil's $300-billion-a-year card industry.

Credit Suisse Securities analyst Victor Schabbel said concerns could arise if Cielo repeats the so-called soft guidance for unit transaction costs. The indicator rose to 0.73 reais in the second quarter from about 0.71 reais in the previous three months.

Schabbel said he expected costs per transaction to end this year at 0.72 reais to 0.74 reais.   Continuación...