News from Brazil

Brazil Business & Economy News

In Brazil on May 3, 2012 at 11:53 pm

ECONOMY

President Dilma Rousseff took a bold but risky step to shake Brazil from its recent economic funk, overhauling 19th century-era rules governing domestic savings accounts in order to allow interest rates to fall further in coming months (Reuters).

Brazil’s manufacturing sector declined unexpectedly in March, raising the likelihood of more stimulus measures and interest rate cuts as policymakers struggle to keep the nation’s fragile economic recovery on track. Industrial production fell 0.5 percent in March from February, government statistics agency IBGE said (Reuters).

Also, Brazil car, truck and bus sales fell 14.2 percent in April from March (Reuters).

Brazil posted a consolidated primary budget surplus of 10.442 billion reais in March, the central bank said (Reuters).

Economists covering Brazil increased their 2012 and 2013 inflation forecasts after two price indexes published last week rose more than expected (Bloomberg).

BUSINESS

Brazilian billionaire Moise Safra has bought an office building in London’s City financial district for about 500 million pounds ($810 million), the latest in a series of deals that have seen foreign investors snap up trophy assets in the UK capital. A statement said companies indirectly controlled by Safra, who co-owns Brazil’s ninth largest bank by assets, Banco Safra, bought the 550,000 square foot Plantation Place without naming a price (Reuters).

BTG Pactual, Brazil’s largest independent investment bank paid an undisclosed sum to join the controlling bloc of Brazilian fitness chain BodyTech, seeking to tap into the nation’s growing health-conscious middle class (Reuters).

FuturaGene Ltd. U.K., held by Suzano Papel e Celulose SA, said it won approval from Brazil for the world’s most advanced trial of a genetically modified forest as it seeks to boost yields of trees used in biomass power plants. The company will plant modified eucalyptus trees in coming weeks in a fourth trial to test the safety and effectiveness of the technology, Chief Executive Officer Stanley Hirsch said in an interview. Inserting genes into trees allows increased yields for electricity generation or manufacturing of pulp and paper (Bloomberg).

Camargo Correa SA is still submitting information about its 2.48 billion-euro ($3.3 billion) bid to buy out Cimpor-Cimentos de Portugal SGPS SA to Portugal’s Securities Market Commission, CMVM Chairman Carlos Tavares said (Bloomberg).

Eike Batista said he’s considering partnering with an industrial group to help develop iron-ore, oil, coal and gold resources that he estimates could be worth about $1.5 trillion. The sale of another stake in his EBX Group Co., following the $2 billion purchase of a 5.63 percent share by Abu Dhabi’s Mubadala Development Co., would help boost global investors’ confidence in his projects, the billionaire said yesterday in an interview on Bloomberg Television’s “Money Moves.” Rio de Janeiro-based EBX’s assets have the potential to yield 80 percent margins, he said, without elaborating (Bloomberg).

AVIATION

The path to recovery for Brazilian airline Gol Linhas Aéreas, which may post its third quarterly loss in a year, looks increasingly unclear as management struggles with slipping seat occupancy, a jump in fuel prices and a weakening currency (Reuters).

Embraer, the world’s third-largest commercial planemaker, continues to expect new regional E-jet orders to keep pace with deliveries this year, the company’s chief executive said (Reuters).

BANKING & FINANCE

Banco do Brasil posted a lower-than-expected quarterly profit and said it will set aside about 25 percent more money to cover bad loan-related losses this year, in the latest indication that a slowing economy and growing debt burden among consumers and companies will hammer earnings (Reuters).

Brazil’s currency policies are driving BlackRock Inc. to buy stocks that will benefit from a weaker real while Brown Brothers Harriman & Co. tells its clients the South American country is losing credibility (Bloomberg).

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MINING & STEEL

After preventing the Vale’s supercarriers from docking in its ports, the Chinese government now bars the installation of distribution centers by the mining company in the country. “We could not obtain the licenses and permits to operate in China,” said Jose Carlos Martins, executive director of Vale (Folha).

OIL & GAS

The chief executive of Brazil’s state-run oil company Petrobras plans to replace more senior executives after dumping her refining and engineering chiefs last week, the country’s Energy Minister Edison Lobao said. Officials gave no reason for the house-cleaning, but CEO Maria das Gracas Foster, who took over in February, has been replacing politically connected Petrobras executives with people considered by most to be apolitical technocrats. Chief Financial Officer Almir Barbassa will be the next senior manager to leave the company, Lobao told reporters in Rio de Janeiro. In an emailed statement, Petrobras later denied that it was considering replacing the CFO. The heads of the international operations and engineering and technology departments will also be replaced, Lobao said without naming any candidates. On April 27, refining chief Paulo Roberto Costa and Renato Souza Duque, Petrobras’ engineering chief, were replaced by Jose Carlos Cosenza and Richard Olm (Reuters).

Eike Batista will hand off the role of chief executive at his oil company OGX, the company said in, as the firm he founded five years ago shifts its focus to ramping up production. Batista, Brazil’s richest man, will remain chairman of OGX’s board, while Paulo Mendonça, the current chief operating officer and director of exploration and reserves, will take over as chief executive (Reuters).

British gas and oil producer BG Group Plc said it had agreed to sell its Brazilian gas distribution business Comgas to Cosan for $1.8 billion as it unveiled soaring first quarter profits on the back of higher oil prices and production (Reuters).

Drilling company Transocean , which is facing scrutiny in Brazil after a November spill, briefly evacuated personnel from a drilling rig near Rio de Janeiro’s coast after it listed slightly during maintenance, the company said (Reuters)

POWER

A group of Brazilian and foreign investors led by buyout firm Laep Investments may bid for Brazilian power distributor Celpa, betting that a bold turnaround could save the debt-laden company from near-bankruptcy (Reuters).

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