(Adds CEO comments, shares)
SAO PAULO, Jan 28 (Reuters) - Brazil’s largest payments processor Cielo SA will seek to reverse a fall in profits throughout this year, Chief Executive Officer Paulo Caffarelli told journalists on Tuesday.
Caffarelli said Cielo’s focus from now on will be on profitability. The move comes nearly a year after the company started fighting to maintain its lead in the industry.
Cielo has been growing fast at small merchants, which are more profitable, he said.
The company also disclosed on Monday a new agreement with its controlling shareholders Banco Bradesco SA and Banco do Brasil SA. For one year, the company will pay banks less for the intermediation, capture, introduction and maintenance of merchants.
Cielo reported on Monday that net profit slumped 68% to 242.4 million reais ($58 million) in the fourth quarter of 2019 as a result of increased competition in the industry.
Operating profit, or earnings before taxes, interest, depreciation and amortization (EBITDA) was 680.3 million reais, an almost 38% drop from the same quarter the year before, while EBITDA margins shrank to 22.9% from 36.3%.
After starting the trading day with a drop of more than 5%, shares were little changed in mid-morning as Caffarelli unveiled the company’s new strategy.
Still, some analysts were skeptical.
“As we’ve been saying for quite some time already, we have a very hard time seeing Cielo succeeding under the current ownership structure,” Banco BTG Pactual SA analysts said in a note to clients.
$1 = 4.1826 reais Reporting by Aluisio Alves; Additional reporting by Ana Mano; writing by Carolina Mandl; Editing by Bernadette Baum
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