SAO PAULO May 7 Brazilian industries are struggling with a less competitive exchange rate and fast wage growth, the chief executive of giant mining company Vale SA said on Tuesday, underscoring issues that have hampered corporate earnings.
"Having the currency out of place and the significant salary increases are the cost of the great advance in Brazilians' incomes. Everything has its counterpart," Vale CEO Murilo Ferreira said.
His remarks at a gathering of executives and government officials sponsored by a Brazilian magazine underscored eroding corporate profitability in Brazil amid the fastest cost inflation and wage growth in years.
More than 40 percent of Brazilian companies polled by Thomson Reuters reported lower profit margins in the first quarter, mainly due to rising labor costs and operating expenses.
Central bank interventions have helped to weaken Brazil's currency, the real, by about 25 percent in two years, but it remains about 50 percent stronger than it was a decade ago.