(Adds details on revenue, debt expenses, EBITDA)
By Guillermo Parra-Bernal
SAO PAULO, Nov 6 (Reuters) - Brazil’s Cetip SA Mercados Organizados’s profit hit a record in the third quarter, in line with estimates, as clearing and custody revenues weathered market volatility and a recovery in car sales bolstered results in the company’s loan liens unit.
Cetip, Latin America’s largest securities clearinghouse, earned 108.1 million reais ($42.1 million) during the quarter, according to a securities filing published late on Thursday. The result was slightly below the average estimate of 109 million reais in a Reuters poll of five analysts.
Profit rose 8.7 percent from the previous and 15.7 percent on a quarterly basis, it said. An unexpected jump in servicing costs stemming from Cetip’s efforts to cut debt curbed profit gains in the quarter, the filing showed.
The results underscore the success of Chief Executive Officer Gilson Finkelsztain’s strategy to bring in new products and services to assuage competition risks and help improve Cetip’s relationship with banks, the company’s largest clients. Management will discuss earnings at a conference call on Friday.
The strategy is helping São Paulo-based Cetip stave off the impact of market turbulence in Brazil this year. Concern over a weaker economy and economic-policy missteps led to reduced financial-market inflows and rising price volatility in the bond and derivatives markets, where Cetip operates as a clearinghouse and a depositary company.
Earnings before interest, taxes, depreciation and amortization, an indicator of profitability in core operations known as EBITDA, rose to 186 million reais, above the poll’s 177 million reais estimate.
EBITDA rose to 72 percent of revenue, compared with an EBITDA margin of 70.7 percent in the second quarter.
Revenue at the securities unit, which accounts for about two-thirds of sales, rose 6 percent to 202 million reais in the wake of higher over-the-counter custody and clearing transactions and stable pricing. The poll’s revenue estimate was 201 million reais.
On a quarterly basis, net revenue rose 6.3 percent to 259 million reais, in line with the poll estimates.
A 1.6 percent rise in domestic auto sales in the quarter propelled sales of auto-loan liens by 9.7 percent to 112 million reais, above the poll’s estimate of 107 million reais. Finklesztain hopes that a new real estate loan lien product, in which Cetip will act as the middleman between home buyers, mortgage lenders and notary offices, will boost revenue.
General expenses rose 1.9 percent to 98 million reais, well above the poll’s forecast of 86 million reais, underscoring a sharp increase in headcount, wages and the cost of outsourced services.
Net financial expenses rose six-fold to 30 million reais as Cetip incurred costs related to local debt buyback and currency-related expenses in a recent loan deal, the filing said. The poll forecast 6 million reais in financial expenses.
$1 = 2.5692 Brazilian reais Reporting by Guillermo Parra-Bernal; Editing by Alan Crosby