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SAO PAULO, Nov 8 (Reuters) - Cielo SA beat third-quarter profit estimates on Tuesday, after Brazil's largest card payment processor cut costs and expenses to offset the impact of a harsh recession that weighed on revenue and transaction volumes.
Barueri, Brazil-based Cielo earned 1.051 billion reais ($332 million) in net income last quarter, above the average estimate of 996.49 million reais compiled by Thomson Reuters. Profit rose 2.1 percent and 14.5 percent on a quarterly and annual bases.
Consolidated costs and sales, general and administrative expenses came in 2.2 percent lower from the prior quarter, more than consensus estimates and the first such decline in at least three quarters. As a result, earnings before interest, tax, depreciation and amortization climbed for the first quarter in three, although less than what analysts expected.
Eduardo Gouveia, who became Cielo's chief executive officer last month, has pledged to push further with a cost-cutting program implemented by his predecessor, Rômulo Dias. Gouveia is deactivating idle sales points and purging Cielo's customer base as well as low-yielding users of card processing machines.
A sharp slowdown in annual volume growth underscores the threat that Brazil's longest recession in decades poses to financial companies which, like Cielo, settles transactions for consumers and companies alike. The company has vowed to put profitability at the forefront to protect profit from the recession and mounting competition.
Management plans to discuss third-quarter results at a Wednesday conference call with investors.
Last quarter, net revenue totaled 3.063 billion reais, down 0.2 percent from the prior three months and below consensus estimates. Gross income from the prepayment of receivables fell for the second time in three quarters.
$1 = 3.1680 reais Reporting by Guillermo Parra-Bernal; Additional reporting by Aluísio Alves in São Paulo; Editing by Alan Crosby and Chris Reese