News from Brazil

Brazil Business & Economy News

In Brazil on June 22, 2012 at 12:35 pm

ECONOMY

Brazil’s jobless rate fell to 5.8 percent in May from 6.0 percent in April, government statistics agency IBGE said. It is the lowest unemployment rate on record for May since the data series began in 2002, according to IBGE (Reuters).

Brazil’s economy will expand 1.5 percent this year on slowing investment and weak industrial production, Credit Suisse Group AG said (Bloomberg).

Brazil’s economy will be expanding in the beginning of next year at the fastest pace since the last quarter of 2010, said central bank President Alexandre Tombini (Bloomberg).

Brazil may be living in a labor bubble. Not because labor costs are rising; they should be rising. Brazilian workers are in demand and have spent generations earning peanuts. The government, and private sector, are finally catching up. But in the process of rising wages there is rising employment. Call it a job market bubble, but Brazil has discovered how to keep lowering unemployment data even when economic growth is a measly 0.2 percent (Forbes).

BUSINESS

An intellectual Frenchman who came to retail relatively late in his career is set to become the industry’s kingpin in Brazil, one of the world’s largest and fastest-growing consumer markets. Jean-Charles Naouri, the steely-eyed boss of French stores group Casino, will take control of Brazil’s biggest retailer, Grupo Pao de Acucar, the climax of his drive to create an emerging markets powerhouse (Reuters).

Private equity firm KKR & Co LP appointed Henrique Meirelles as a senior adviser, giving the longest-serving central bank president in Brazilian history his latest high profile job in a string of private-sector leadership roles (Reuters).

Brazil’s government will always side with Brazilian companies over foreign rivals in corporate takeover bids so long as their proposals are financially sound and viable, the head of state development bank BNDES said (Reuters).

OSX, the shipbuilding unit of the energy and mining conglomerate controlled by billionaire Eike Batista, secured 2.7 billion reais ($1.3 billion) in financing for the construction of its Açú ship yard 250 miles north of Rio de Janeiro, the company said in a securities filing (Reuters).

AGRI ETC.

The profitability of sugar exports from Brazil, the world’s biggest producer, over sales in the domestic market increased last week as harvesting delays helped boost international prices, according to Cepea (Bloomberg).

Fibria Celulose SA and Suzano Papel & Celulose SA, Brazil’s biggest pulp makers, had their earnings estimates cut by more than any other company in the country as the industry adds factories amid waning overseas demand (Bloomberg).

AUTOMOTIVE

Ford Motor Co expects the Brazilian auto market to set a new sales record by the end of the year despite a sluggish start, as recent tax breaks and record-low interest rates jumpstart stagnant business at dealerships (Reuters).

AVIATION

Airline Avianca Brazil will add eight Airbus jetliners this year, growing its fleet by nearly a third and keeping downward pressure on ticket prices in a market where the biggest airlines are struggling to restore profits. Avianca’s Chief Executive Jose Efromovich told reporters that the airline was adding three more planes than originally planned due to better-than-expected passenger traffic (Reuters).

Gol Linhas Aereas, Brazil’s second-largest airline, named Paulo Sergio Kakinoff as chief executive after the company recently streamlined to cut mounting losses and fend off competition from smaller rivals. Kakinoff, the former head of carmaker Audi’s operations in Brazil, replaces Constantino de Oliveira Jr., the son of the airline’s founder and a major shareholder. Kakinoff, who was already a Gol board member, will take over on July 2 (Reuters).

BANKING & FINANCE

Mizuho Financial Group said it had agreed to buy a Brazilian unit of Germany’s WestLB, the latest move by a Japanese bank to snap up assets amid the euro zone crisis (Reuters).

Policymakers looking at whether to spur competition in Brazil’s financial exchange industry must consider the need to keep adequate levels of liquidity and transparency in the fast-growing bourse market, an independent study commissioned by the nation’s securities regulator said (Reuters).

Credit Suisse estimated that Brazilian card payment processor Redecard was worth 34.66-38.12 Brazilian reals ($16.95-$18.65) per share, putting a buyout offer by local bank Itau Unibanco at the lower end of that range (Reuters).

BM&FBovespa, Brazil’s stock exchange, is facing a loss in market share estimated at as much as 30 percent by HSBC Holdings Plc and Banco Itau BBA SA as the nation considers boosting competition among trading platforms (Bloomberg).

MINING & STEEL

Posco is studying a possible purchase of a stake in ThyssenKrupp AG’s CSA steel slab mill in Rio de Janeiro, the South Korean steelmaker’s Chief Executive Chung Joon-yang said (Reuters).

Earlier CSN , Brazil’s second-largest producer of flat steel products, will analyze ThyssenKrupp’s joint venture in local slab-making mill CSA if the German steelmaker formally puts its stake up for sale (Reuters).

Brazilian steel makers face slower demand growth than expected as they struggle with higher costs and growing imports, Gerdau SA Chief Executive Andre Gerdau Johannpeter said, as he called on the government to step in to help the industry (Reuters).

Billionaire Eike Batista, Brazil’s richest man, is selling a 49 percent stake in his AUX gold business to the Qatar Investment Authority for about $2 billion (Bloomberg).

OIL & GAS

Petrobras and its latest business plan have a serious problem. The company is likely to struggle to find the cash to pay for the hundreds of ships and dozens of oil fields, drill-rigs and platforms it wants in order to catapult Brazil into the ranks of the world’s top-four oil producers by 2020 (Reuters).

Petroleo Brasileiro SA is the worst investment among the world’s biggest oil companies this year as Brazil’s state-controlled producer suffers delays and cost overruns developing the largest oil finds in more than a decade (Bloomberg).

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