(Adds CEO comments, background)
By Carolina Mandl
SAO PAULO, April 24 (Reuters) - Cielo SA Chief Executive Paulo Caffarelli said on Wednesday it was too early to determine if the Brazilian card processor would meet its annual profit target in 2019, as competition is still fierce, though he maintained that guidance.
Caffarelli, speaking in a press conference a day after the release of the company’s quarterly earnings, said prices charged are still likely to go down in the card processing industry, as card processors are fighting for merchants.
Cielo reported on Tuesday net income of 549 million reais ($140 million) for the first quarter, down sharply from the same period a year earlier and below a Refinitiv consensus of 571 million reais.
Caffarelli had previously said Cielo was aiming for an annual profit between 2.3 billion reais and 2.6 billion reais in 2019.
In a note to clients, BTG Pactual analysts said Cielo’s “2019 guidance is likely to be cut.”
Shares in Cielo were up some 4 percent in early trading on Wednesday, boosted by an 8 percent increase in the company’s number of card reader machines from the previous quarter as it added new micro entrepreneurs like street vendors as clients.
In a reaction to competitors’ recent announcements, Cielo said it will offer instant payments to merchants, compared to the usual 30-day period. But it will charge clients for this service, unlike Itaú Unibanco Holding SA’s card processing unit Rede.
“We are most concerned about the recent competitive developments of incumbents and new entrants aggressively cutting fees,” analysts at Brasil Plural said in a note to clients.
Caffarelli said Cielo had increased its salesforce from 700 to 2,200 people. He added that the company is seeking to maintain its leadership position in the card processing sector. (Reporting by Carolina Mandl Editing by Chizu Nomiyama and Paul Simao)