(Recasts leads, adds paragraphs 2-3 with comments from conference call)
SAO PAULO, Nov 10 (Reuters) - Brazil’s Kroton Educacional SA still plans to offer new programs even as an adverse economic scenario is causing more students to delay tuition payments, Chief Executive Officer Rodrigo Galindo said Thursday.
In a conference call to discuss third-quarter results with investors, Galindo said Kroton would keep its greenfield expansion projects and raise provisions against student defaults, albeit at a slower pace than in prior quarters, to weather the economic downturn.
Default provisions related to Kroton’s on-site courses jumped 117.5 percent to almost 85 million reais ($25.3 million) last quarter from a year ago, according to a securities filing.
Still, Galindo said Kroton “has kept the same levels of efficiency,” citing measures to increase the average value of tuitions, or the price of courses per student, by reducing the number of scholarships and discounts.
Net profit in the quarter totaled 368.2 million reais ($113.8 million), based on pro-forma accounting methods that Kroton used to compensate for delayed revenue from students re-enrolling in a government loan program known as Fies.
With additional adjustments for one-time restructuring costs, Kroton reported net income of 452.7 million reais, in line with a consensus estimate of 455.1 million reais.
Kroton shares fell 4.83 percent in mid-afternoon trading as investors reacted to the results.
Carlos Lazar, Kroton’s investor relations officer, said in an interview that the pro-forma figures provided the best base for comparison with earnings in prior quarters. He said Kroton would meet its Fies-related re-enrollment targets in the fourth quarter, but declined to elaborate.
“Even though Fies re-enrollments got delayed and started in September, the students were attending classes,” Lazar said.
Kroton said the student base in its on-site and distance-learning programs rose by 1.5 percent and 12 percent, respectively, excluding the Uniasselvi unit sold this year.
Selling assets helped lift Kroton to a net cash position of 518 million reais in September, up from net debt of 365 million reais a year ago. Returns from short-term investments of its cash helped its net financial result to rebound to 12 million reais, compared to a net financial loss of 30 million reais a year ago. ($1=3.36 reais) (Reporting by Ana Mano; Editing by Bernadette Baum and Cynthia Osterman)