(Corrects title of Hidalgo to chief financial officer in second-to-last paragraph)
* Net income comes in line with poll estimate
* Lower rates, expense controls lift profits
* EBITDA up 7.9 pct, slightly misses forecast
SAO PAULO, July 24 Grupo Pão de Açúcar , Brazil's biggest diversified retailer, reported a 75 percent jump in second-quarter net income as revenue increased faster than expenses and record-low borrowing costs helped slash debt-servicing costs.
The São Paulo-based company earned 159 million reais ($77.9 million), it said in a securities filing early on Tuesday. That was in line with the average estimate of 160 million reais from eight analysts in a Reuters poll.
Gross sales grew 6.4 percent at Pão de Açúcar's stores that had been open for at least 12 months, despite an abrupt economic slowdown that has weighed on demand for home appliances, some foods and apparel throughout the year. Same-store sales had averaged 10 percent annual growth in the three years since.
Costs rose 6.2 percent, while general and administrative expenses contracted by 3 percent, the filing showed.
Pão de Açúcar, controlled by France's Casino Guichard Perrachon, "continues to enjoy positive momentum with a resilient food business," BTG Pactual analyst Fabio Monteiro wrote in a client note.
But weakening indicators of demand suggest a consumer slowdown may be dragging on growth at the group's supermarkets and home electronics chains, as a faltering economy and record personal debts have made Brazilians warier of spending.
Indeed, fiercer competition in the company's Via Varejo home appliance unit, chiefly in its e-commerce platform, were a drag on consolidated results. Same-store sales growth at Via Varejo slowed to 6.7 percent from 9.2 percent in the first quarter.
"Despite more intense competition in the durable goods division, financial results continued to improve, thanks to the lower interest rates," Monteiro said.
The nation's borrowing costs hit an all-time low late in May. Revenue from investments and other nonoperating items, which usually get a boost when the interest rates fall, jumped 8.5 percent at Pão de Açúcar, while debt-servicing costs slumped 8.2 percent, the filing said.
Consolidated financial expenses fell to 3.2 percent of gross sales from 3.8 percent a year earlier, according to Thomson Reuters calculations -- an indication that the company is taking advantage of the declining cost of capital and the growing size of its operations to fetch more attractive funding conditions.
Earnings before interest, taxes, depreciation and amortization rose 7.9 percent to 692 million reais, missing forecasts of 707 million reais in the Reuters poll.
EBITDA rose slightly to 5.8 percent of net revenue from 5.7 percent a year earlier. Management has signaled it wants this so-called EBITDA margin at 6 percent to 7 percent in the long run.
Company officials plan to discuss results with investors at a conference call later in the day.
Late on Monday, Christophe Hidalgo, a long-time Casino executive, was named Pão de Açúcar's chief financial officer.
The profit figure excludes profit from the group's real estate unit, which analysts in the poll ignored for the sake of comparison. Including property-related income, Pão de Açúcar's net profit more than doubled to 255 million reais.
($1 = 2.04 Brazilian reais) (Reporting by Guillermo Parra-Bernal; Additional reporting by Alberto Alerigi Jr., Brad Haynes and Vivian Pereira in São Paulo; Editing by Lisa Von Ahn)
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