Brazil's Cielo 1st-qtr profit beats estimates

Thu May 2, 2013 7:44pm EDT

* Net income at 640 mln R beats estimates

* Revenue of 1.5 bln R misses poll estimate

SAO PAULO May 2 (Reuters) - Cielo SA, Brazil's largest card payment processor, posted on Thursday first-quarter net income that slightly beat analysts' estimates as lower debt-servicing costs helped offset a jump in sales, administrative and general expenses.

The Barueri, Brazil-based company earned 640.9 million reais (US$320.45 million) in the quarter, up 5 percent from the prior quarter, according to a securities filing. The result was higher than the 616 million reais in profit that was forecast in a Reuters poll of nine analysts.

Cielo's earnings rose 13.1 percent from 567 million reais in the year-earlier period, the filing said. Management at the merchant acquirer expects 7 percent growth in net income for this year.

Processed volume continued to deliver robust growth despite flagging economic activity and consumers' reluctance to spend.

Cielo is faced with the risk of declining card usage in Latin America's largest economy if a slowdown extends for a third year and job creation begins to falter.

Net revenue was 1.5 billion reais, up 28.4 percent on an annual basis. The result was below 1.72 billion reais in the poll.

Administrative and general expenses rose 58.9 percent to 58.5 million reais from a year earlier while sales and marketing expenses increased 134.2 percent to 54.7 million reais. Financial expenses also rose 270.5 percent to 44.6 million reais from the fourth quarter of 2012.

Earnings before interest, tax, depreciation and amortization, a gauge of operational profitability known as EBITDA, rose 5.8 percent to 874.5 million reais from the previous quarter. On an annual basis, EBITDA rose 13.8 percent, due to higher revenue from the clearing of card transactions and equipment rental.

The poll estimate for EBITDA was 992 million reais.

Management will discuss quarterly earnings at a conference call scheduled for early Friday.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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