UPDATE 1-Brazil's Cielo misses profit, unit costs estimate amid downturn

lunes 1 de febrero de 2016 18:47 GYT

(Adds details on quarterly performance throughout)

By Guillermo Parra-Bernal

SAO PAULO Feb 1 (Reuters) - Cielo SA, Brazil's No. 1 card payment processor, missed fourth-quarter profit and transaction cost estimates, after a jump in operating expenses during the year-end holiday season more than offset robust receivables prepayment and card processing revenues.

The Barueri, Brazil-based company earned 899.17 million reais ($227 million) in net income last quarter, down 2.1 percent from the third quarter, according to a Monday securities filing. A Reuters poll of analysts expected profit of 954 million reais.

A weaker Brazilian currency that fanned costs at Cielo's U.S. unit and higher maintenance and marketing expenses drove earnings before interest, tax, depreciation and amortization to their lowest in three quarters. Cielo missed a goal for costs per transaction of 0.49 reais to 0.51 reais last year, underscoring the problems facing Chief Executive Officer Rômulo Dias to attain more efficiency.

Volume growth for credit card transactions slowed last quarter while cost growth outpaced revenue growth for the third time in six quarters. Net revenue rose 4.8 percent on a quarterly basis, below the poll's 6.9 percent forecast, while costs rose 8.6 percent.

Income from prepayment of receivables topped estimates, rising 9.2 percent last quarter. To reduce Cielo's increasing dependence on receivables discounting, which rose to a record 70 percent of profit in the quarter, Dias is focusing on growth at processing joint venture Cateno and grabbing additional market share from aggressive rivals.

Unit costs, or costs per transaction, ended the quarter at 0.54 reais. Clearer cost-reduction goals, like disclosing growth range targets instead of the unit cost ratio, are key to reinstill confidence in Cielo's stock, which is down 9 percent in the past three months, according to Victor Schabbel, an analyst with Credit Suisse Securities.

EBITDA, as the most widely watched gauge of operational profit is known, fell 2.3 percent in the quarter, compared with the poll's 7.4 percent increase forecast. EBITDA ended the quarter at 1.329 billion reais, the lowest since the first three months of last year.

Higher taxes also weighed down net income in the quarter. Management led by Dias will discuss results with investors at a conference call early on Tuesday.

($1 = 3.9609 Brazilian reais) (Additional reporting by Aluísio Alves in São Paulo; Editing by Chris Reese, Bernard Orr)