UPDATE 1-Brazil's Pão de Açúcar boosts profit despite slowdown

Mon Apr 29, 2013 9:16pm EDT

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SAO PAULO, April 29 (Reuters) - Grupo Pão de Açúcar , Brazil's biggest retailer, posted a 70 percent rise in quarterly profit on Monday as it thinned its executive ranks and reduced financial expenses in the face of cooling demand.

First-quarter net income of 275 million reais ($138 million) beat an average forecast of 244 million reais in a Reuters survey of eight analysts.

The robust earnings came despite Brazilians' slowing wage growth and eroding consumer confidence, highlighting the benefits of Pão de Açúcar's strong market position and economies of scale that it continues to discover.

The group offset pressure on its supermarkets division, where food inflation has hurt sales, with cost savings in its Viavarejo appliance and home furnishings unit, which was formed through mergers that received final approval this month.

French group Casino Guichard Perrachon, which gained control of Pão de Açúcar in June last year, has also shaken up management ranks, leading to a "tighter and more agile decision-making structure," according to the earnings release.

Earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, rose 11 percent to 862 million reais, slightly below an average estimate of 874 million reais.

The group cut financial expenses by 24 percent to 254 million reais in the quarter, due in part to a lower benchmark interest rate and tighter control of receivables.

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