(Recasts to add details on guidance, second-quarter results throughout)
SAO PAULO, Aug 1 (Reuters) - Cielo SA, Brazil’s largest payment processor, cut targets for expense and capital spending growth this year, citing slowing inflation and declining client rentals of point-of-sale machines stemming from a harsh recession.
In a Tuesday securities filing, Cielo said cost and expense growth at the Cielo Brasil and Cateno subsidiaries was cut to between zero and 2 percent from a goal of 4 percent to 6 percent earlier in the year.
Guidance for capital spending, or money earmarked to buy payment processing equipment, was slashed to between 150 million reais and 200 million reais ($48 million and $64 million), from 400 million reais.
The decision comes as second-quarter operational profit missed estimates. Lower equipment rental fees and falling proceeds from the capturing and settlement of financial transactions drove earnings before interest, tax, depreciation and amortization down for a third straight quarter.
Management led by Chief Executive Eduardo Campozana Gouveia will discuss results at a conference call early on Wednesday. Gouveia has focused on strict expense controls to offset the impact of Brazil’s worst recession on record and heightening competition.
Income from receivable prepayments also felt the pinch of the central bank’s drive to slash borrowing costs in Latin America’s largest economy, pushing profit to the lowest level in five quarters. Barueri, Brazil-based Cielo earned 1.040 billion reais in net income last quarter, down 0.5 percent from the prior three months.
Still, net income beat estimates in the second quarter, reflecting declining debt-servicing costs and better-than-expected revenue at a credit card venture and a U.S.-based payment solutions unit. The number topped an average consensus estimate of 1.012 billion reais compiled by Thomson Reuters.
The gauge of operational profit known as EBITDA fell 3.2 percent to 1.280 billion reais, below the consensus estimate of 1.583 billion reais.
Prepayment of receivables, through which Cielo helps retailers settle their commercial bills more rapidly, slipped for a fourth straight quarter to 574 million reais - the lowest since the first three months of 2015.
$1 = 3.1260 reais Reporting by Guillermo Parra-Bernal; Editing by Chris Reese and Lisa Shumaker