News from Brazil

Brazil Business & Economy News

In Brazil on August 10, 2012 at 10:24 am

ECONOMY

A spike in food prices pushed up Brazil’s inflation rate in July but probably not fast enough to stop the central bank from cutting interest rates this month for the ninth straight time (Reuters).

An exchange rate of over 2 reais to the U.S. dollar lends competitiveness to Brazil’s industrial sector, Finance Minister Guido Mantega said (Reuters).

Brazil’s services sector shrank in July at the fastest pace in over three years, according to a private survey, raising doubts on whether the world’s sixth-largest economy will rebound as expected over the next months (Reuters).

Brazil’s economic growth will accelerate in the second half of the year, said Aldo Mendes, the central bank director for monetary policy (Bloomberg).

Some 58.2 percent of Brazilians use their monthly salary to pay off “installment debt,” according to a new survey by the Instituto Brasileiro de Economia (Brazilian Institute of Economics, Ibre-FGV). Yet the survey also showed most debts were short-term: 78.4 percent had installment repayment plans of six months or less, and only 10.1 percent had taken out plans for twelve months or more (The Rio Times).

Brazil should be able to achieve moderate growth in 2012, while most of the OECD’s 34 member economies will lose steam in the coming months, the economic grouping said (Xinhua).

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

Dutch food and chemicals group DSM has agreed to buy privately-held Brazilian animal nutrition company Tortuga for about 465 million euros ($578 million) to strengthen its presence in Latin America, making its fourth big acquisition (Reuters).

Realtime launched in the US and announced a $100 million investment to help the world transition from static to live web. Based in Brazil, Realtime has developed technology that enables the Internet to update instantaneously and continuously. Rather than a request-and-response protocol, Realtime is powered by  Open Real Time Connectivity. With ORTC,  applications can update directly from the server to the connected user without manually refreshing the page (Reuters).

Ivanhoé Cambridge, the real estate arm of Canadian pension fund Caisse de dépôt et placement du Québec, announced it is growing its commercial real estate portfolio in Brazil with a C$132.8 million ($132.9 million) investment in the country (Reuters).

Buyers of equipment made by Yingli Green Energy Holding Co., Suntech Power Holdings Co. and Trina Solar Ltd.  — three of the world’s four largest panel makers — aren’t eligible for loans at below-market rates from state bank BNDES. That leaves Campinas, Brazil-based Tecnometal Equipamentos Ltda. as the only maker of subsidized panels that turn sunlight into electricity (Bloomberg).

Arcadis NV, the largest Dutch designer of dikes that last week forecast 2012 profit from operations would rise 20 to 25 percent, acquired Brazil’s biggest water engineering and consultancy company. The company said it bought ETEP Consultoria, Gerenciamento e Servicos Ltda. to expand in the Brazilian water market (Bloomberg).

EBX Group has committed an investment of 6 billion U.S. dollars in ” high impact” projects in Malaysia in a move that could mark the beginning of strong economic ties between the two countries. Malaysia’s government announced this after EBX Group Chairman and Brazil’s richest man, Eike Batista, paid a courtesy call on Prime Minister Najib Razak at the latter’s office in Putrajaya (Xinhua).

An unreleased version of the ranking of billionaires in the magazine “Forbes” puts Eike Batista in a “technical tie” with businessman Jorge Paulo Lemann on the list of the richest people in the country (Folha).

AGRI ETC.

The Brazilian government lowered its forecast for the country’s cane crop this April-March season, while holding stable the view of its expected sugar output, which accounts for half of global exports of the sweetener (Reuters).

Brazilian sugar cane mills are vulnerable to a wave of takeovers in which deep-pocketed groups devour fragile neighbors, while soft sugar and ethanol prices weaken small mills and make building new ones too costly, industry analysts said (Reuters).

Brazil set a minimum price of 10.10 reais ($4.96) per 40.8-kilogram box of oranges in an attempt to help farmers sell excess production profitably. The excess production will be sold through auctions, the Agriculture Ministry said. Brazil wants to develop the domestic orange juice market, said Jose Carlos Vaz, the ministry’s executive secretary (Bloomberg).

Brazil will reap a record grain harvest of 163.3 million tons this year, a gain of two per cent over 2011, the IBGE statistics agency says. The IBGE’s latest forecast, based on July data is 1.6% higher than the previous projection (MercoPress).

Prices of Brazilian crop land have soared 18% in the past year, to judge by data from one of the country’s biggest agricultural groups, which revealed plans to take sowings nearly to 300,000 hectares, according to Agrimoney.com (MercoPress).

AUTOMOTIVE

Japanese automaker Toyota said it will invest about 1 billion reais ($494 million) to build a new Brazilian engine factory supplying local car plants, bringing more of its supply chain to Brazil under government pressure (Reuters).

General Motors Co and a Brazilian union have agreed to postpone until November a politically sensitive decision to eliminate as many as 1,840 jobs at a factory near São Paulo (Reuters).

BANKING & FINANCE

Net income at BTG Pactual , Brazil’s sole listed investment bank, more than doubled in the second quarter as successful bets on principal investments helped offset a surge in payroll and operational expenses (Reuters).

State-run bank Caixa Econômica Federal plans to increase its loan book by a whopping 42 percent this year, expanding mortgage and consumer lending as state and private- sector rivals retrench, Chief Executive Jorge Hereda said (Reuters).

Brazil bulls. They do exist. Beyondbrics has found one in the form of Caixa Economico, the Brazilian bank wholly owned by the government.

Bank of America Corp has plucked four Brazilian employees from Morgan Stanley, including the new head of its equities business in Latin America (Reuters).

Itau Unibanco is considering a bid for Citizens, the American unit of British state-controlled lender Royal Bank of Scotland , the Sunday Times reported (Reuters).

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MINING & STEEL

Vale SA forecasts it will miss base- metals output targets for a second year, fueling calls from analysts for the company to sell at least part of the business plagued by strikes and sinking prices (Reuters).

OIL & GAS

Petrobras has not received approval for additional increases in domestic fuel prices and there is no increase “on the horizon,” Finance Minister Guido Mantega, who is also chairman of the Petrobras board, said (Reuters).

Singapore’s Keppel Corp , the world’s biggest oil rig maker, said its Brazil unit FELS Brasil S/A has secured two contracts worth a total of about $950 million from Petrobras-led consortiums Guara BV and Tupi BV (Reuters).

Sembcorp Marine Ltd, the world’s second-largest oil rig builder, said it has secured contracts worth about $4 billion from Sete Brasil, highlighting Brazil’s push to become one of the world’s three largest oil producers (Reuters).

OGX Petroleo e Gas SA , Brazil’s No. 2 oil company by market value, restarted output over the weekend at an offshore well northeast of Rio de Janeiro where production was suspended in June, a company spokesman told Reuters.

Petrobras revealed its first quarterly loss in 13 years. In dollar terms, Petrobras lost $685 million, compared with profits of more than $5 billion in the first quarter. It is a considerable accomplishment for an oil company to lose hundreds of millions of dollars during a quarter when crude prices are over $100 a barrel. Indeed, a closer look shows the results for what they are; a damming indictment of Brazil’s oil policy, which is sending Petrobras down the route of debt and financial losses that have long been the curse of Mexico’s state oil monopoly, Pemex (Reuters).

From it’s multi-billion dollar secondary share offering a few years back that spooked investors worried about the government controlling even more of the company while it diluted shares of minority holders, to the government keeping a lid on fuel prices that capped profits, Petrobras is the class state run entity. It doesn’t exist to make shareholders profits. It exists for the commonwealth (Forbes).

PORTS & LOGISTICS

Australian industrial property developer Goodman Group wants to enter the Brazilian market to tap strong demand for high-quality warehouses, and will likely make an announcement on such a move later this year (Reuters).

Brazilian soy and corn exporters are seeking help from the local courts to guarantee clearance documents from striking inspection agents at the country’s main ports, the grain exporters association Anec said (Reuters).

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