UPDATE 1-Brazil's BM&FBovespa sees expenses at low end of 2014 target

viernes 8 de agosto de 2014 11:04 GYT

(Recasts to add comments, details on second-quarter earnings, share performance)

By Aluísio Alves and Guillermo Parra-Bernal

SAO PAULO Aug 8 (Reuters) - BM&FBovespa SA said on Friday expenses in 2014 would come in at the low end of its target, a sign that Brazil's sole listed exchange will continue to rely on cost controls to counter flagging capital markets activity.

Expenses will "stay closer to the bottom of our guidance" of 595 million reais to 615 million reais ($258 million to $267 million) this year, Chief Financial Officer Daniel Sonder said at an event on Friday.

BM&FBovespa's ability to control its sales, general and administrative costs helped fuel an unexpectedly better second-quarter profit and drive shares higher on Friday.

The São Paulo-based company reported on Thursday it earned 250.1 million reais ($109 million) in the quarter, compared with an average forecast of 249 million reais in a Reuters poll of seven analysts. While revenue plunged 22.5 percent on an annual basis, expenses rose a meager 0.8 percent, and financial income jumped 38 percent in the period.

While weak volumes were offset by a rising stock market, the expense controls highlight how the company, led by Chief Executive Officer Edemir Pinto, is committed to delivering robust margins, said Victor Schabbel, an analyst with Credit Suisse Securities.

"While volatility and market appreciation helped, more came from management's efforts. Despite not willing to raise the bar higher, expectations are now for expenses to be closer or even lower than guidance," said Schabbel, who on Friday raised his target price on BM&FBovespa shares to 14 reais from 13.50 reais.

The stock rose 0.3 percent to 12.19 reais on Friday, extending its year-to-date gain to 12 percent.   Continuación...