News from Brazil

Brazil Business & Economy News

In Brazil on May 18, 2012 at 9:46 am

ECONOMY

For Brazil’s government recent weeks have brought some long-awaited victories. The overvalued currency has weakened to two reais to the dollar, from its peak of 1.54 last July. At 9% the Central Bank’s policy interest rate is near to historic lows and should fall further after President Dilma Rousseff’s brave decision to cut returns on government-backed savings accounts. Neither, though, was enough to reverse a recent shift in mood against Brazil (The Economist).

Senior members of Brazil’s government now believe the economy will expand less than the official 4.5 percent forecast this year and are bringing internal projections more into line with private-sector estimates of about 3 percent growth, four officials told Reuters.

Brazil’s payroll job growth accelerated in April from March, the biggest monthly jump so far this year as struggling industries showed signs of recovery that could boost a lackluster economy. The economy added a net 216,974 payroll jobs in April, the Labor Ministry said, compared with an upwardly-revised 141,000 in March (Reuters).

Brazil’s government-controlled prices for gasoline will not be raised even after the country’s currency hit its weakest level since 2009, Finance Minister Guido Mantega said (Reuters).

Brazil’s finance minister, Guido Mantega, reiterated his opinion that the appreciating U.S. dollar will increase the competitiveness of Brazilian industry. Speaking at the finance ministry, Mantega said that the current exchange rate, just under US$1 to R$2, allowed local products to remain cheaper than imported goods subsequently boosting national production (The Rio Times).

Brazil’s central bank will begin publishing board members’ votes on interest rates, a move that Goldman Sachs Group Inc. says could inhibit board members from going against President Dilma Rousseff’s desire for lower rates (Bloomberg).

DIRECT DATA

Check out the latest economic indicators in English directly at Brazil’s BCB or central bank, the Sao Paulo stock Eechange BM&F Bovespa and Brazil’s statistics institute, IBGE.

BUSINESS

French retailer Casino Guichard Perrachon took a key step in its plan to take control of Grupo Pão de Açúcar, stripping its estranged partner in the company of the right to name most of the board members at Brazil’s largest retailer (Reuters).

Eike Batista plans to sell a stake worth up to $1 billion in his EBX investment holding company which has assets in energy, mining and engineering firms, to two foreign investors, the O Estado de S. Paulo newspaper said (Reuters).

Reports last week that Facebook co-founder Eduardo Saverin, 30 and born in Brazil, had renounced the American citizenship he gained as a teenager led to considerable criticism that he was skipping out to avoid taxes. He has become a permanent resident of Singapore, which levies no capital gains taxes (The New York Times).

According to the World Bank’s 2012 annual global report “Doing Business”, which evaluates the ease of starting a business, dealing with construction permits, registering property, and paying taxes, Brazil ranked 126th this year out of 183 countries. On average, it takes 13 procedures and 119 days of work to start a business in Brazil. And construction permits demand an average 17 procedures and 469 days to finally get authorised. French chef Pierre Cornet-Vernet could never imagine it would take him 11 months to open his confectionery story Paradis in Rio de Janeiro’s famous Copacabana neighbourhood (BBC).

AGRI ETC.

Meatpacker JBS SA has sold one of its two units based in San Jose, Argentina, the company said. The unit was sold for 16.5 million dollars to a group of local cooperatives and the provincial government, which will run the operation (MercoPress).

AVIATION

Deutsche Lufthansa AG is considering a bid for state-owned carrier TAP SGPS SA to strengthen its position in South America and protect its partnership with a key member of the Star Alliance (Bloomberg).

American Airlines said it wants to operate 17 additional weekly flights between the United States and Brazil. It has asked for governmental approval for a second daily flight from New York Kennedy to Sao Paul, beginning Oct. 1, an increase in flights from Miami to Recife and Salvador on Nov. 15 and a second daily flight from Miami to Rio de Janeiro on Dec. 15. (Dallas News).

AUTOMOTIVE

As automakers rush to demonstrate leadership on environmental issues, green has become marketing gold. The latest proof came from General Motors, which said that it expected an engine plant under construction in southern Brazil to receive Leadership in Energy and Environmental Design certification (The New York Times).

BANKING

Votorantim Finanças, the investment holding company that controls Brazil’s Banco Votorantim, said in a statement that it is “fully committed to its position as a shareholder and to the bank’s future.” Banco do Brasil is considering buying out Banco Votorantim, the third-biggest Brazilian private sector lender, Reuters reported (Reuters).

Itaú BBA last week won a coveted role on Facebook Inc’s IPO advisory team, becoming one of 33 banks that will underwrite one of the most eagerly awaited stock market debuts ever (Reuters).

Banco Modal SA, the Brazilian lender trying to become a full-service investment bank, is in talks to buy the Brazil subsidiary of Portugal’s Banif SGPS SA (Bloomberg).

LOGISTICS

Maersk Line, the container-ship division of Denmark’s A.P. Moller-Maersk A/S , plans to raise its Latin American cargo rates by as much as 30 percent this year to stanch losses and pay for 16 ships being built for the region (Reuters).

MMX, the mining part of the industrial conglomerate EBX owned by Brazil’s richest man, Eike Batista, is entering the final phase of construction of its iron ore export port in Itaguai, on the Sepetiba bay in the state of Rio de Janeiro, 75 km southwest of the city. The port, dubbed the Sudeste Superport, is due to start operations at the beginning of 2013, shipping an expected twelve million tons of iron ore in its first year. The port’s total capacity is fifty million tons, with the option of being expanded to 100 million tons (The Rio Times).

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MINING & STEEL

Manabi SA, an iron ore startup which wants to build a mine, pipeline and port, said that its board has applied to the Brazilian securities regulator for approval to sell stock in Brazil, Canada and the United States (Reuters).

Vale, is not excluding Chinese shipowners from transporting its iron ore and remains open to selling its huge dry bulk carriers to them. A senior Vale official met the China Shipowners’ Association to smooth relations after Chinese industry officials said the miner stopped hiring vessels from some firms in retaliation for Beijing’s ban on its ships (Reuters).

ThyssenKrupp could sell Brazilian and U.S. mills that have saddled Germany’s biggest steelmaker with heavy losses, refocusing the group on its core European business after several years of delays and damaging cost overruns. ThyssenKrupp will offer its Brazilian plant to its partner Vale, which owns about a quarter of the slab-producing CSA plant venture, but will also talk to possible buyers in Asia (Reuters).

OIL & GAS

Bolivia’s state energy company YPFB plans to negotiate three new contracts with Brazil’s Petrobras to explore natural gas fields in the southern province of Tarija (Reuters).

Brazil’s state-led oil company Petrobras said that first-quarter profit fell 16 percent as losses on refining, as well as rising operational and exploration costs, ate into growing revenue. Results, though, beat analysts estimates (Reuters).

Vale SA, the world’s largest iron-ore producer, hired Bank of Nova Scotia and Citigroup Inc. to sell its oil and natural gas assets in Brazil as it focuses on metals production. The Rio de Janeiro-based company’s stakes in the oil fields, located both within Brazil and offshore, may be worth as much as $1 billion (Bloomberg).

REAL ESTATE

Cyrela, Brazil’s No. 2 homebuilder, posted a 59 percent jump in first-quarter earnings, breaking with a string of disappointing results in the industry as cautious growth and a focus on existing stock helped boost sales (Reuters).

Homebuilder PDG Realty has finished the rapid expansion that made it the country’s biggest and is now cutting expenses to improve profitability at its current size, the company’s chief executive said (Reuters).

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