SAO PAULO, Oct 27 (Reuters) - Via Varejo SA, Brazil’s largest appliances retailer, is mulling use of a tax benefit that could add 211 million reais ($67 million) to its bottom line this year, Alexandre Gonçalves, head of investor relations, said on Thursday.
The company could make the decision in the fourth quarter after a year-long analysis, Gonçalves said in a phone interview.
Use of the tax benefit would have added 66 million reais to Via Varejo’s results in the third quarter.
Earnings before interest, tax, debt and amortization, a gauge of profitability known as EBITDA, would have been 100 million reais higher in the third quarter had the decision already been made, according to a Tuesday securities filing.
In the first nine months of the year, EBITDA would have been 320 million reais higher with the tax benefit, Gonçalves said.
The issue arose after the government revoked a tax break on electronic goods, which had exempted Via Varejo from the so-called Pis and Cofins tax.
“Most of our competitors use the benefit but we were being conservative,” Gonçalves said. Since the law was revoked in the beginning of the year, Via Varejo has paid a 9.25 percent Pis and Cofins levy, he added.
Via Varejo posted a net loss of 90 million reais in the third quarter as Brazil’s prolonged recession continued to erode consumer confidence and demand for electronic goods, according to the securities filing.
Net sales were virtually stable at 4.11 billion reais, although sales at stores open for more than a year rose 3.2 percent, a sign that economic conditions may be gradually improving.
“Our business is heavily dependent on the macroeconomic outlook. We don’t see the recovery starting immediately but the cut in Brazil’s benchmark interest rate signals we may be near an inflection point,” Gonçalves said. ($1 = 3.16 reais) (Editing by Matthew Lewis)