Bovespa Sinks as Petrobras Earnings Decline More Than Forecast

The Bovespa index sank, sending the index toward its first weekly drop this year, as energy stocks tumbled after Petroleo Brasileiro SA (PETR4) reported profit that missed estimates and MPX Energia SA said it would delay $4 billion of investment.

Petrobras, as Brazil’s biggest company by market value is known, fell the most on the gauge. MPX Energia (MPXE3) dropped the most in a week on plans to postpone investments in a Colombian coal project by more than a year amid price declines for the fuel.

The Bovespa retreated 2 percent to 64,211.91 at 1 p.m. in Sao Paulo. Fifty-three stocks dropped on the gauge, while 17 advanced. Brazil’s benchmark equity index is down 1.5 percent this week. The real weakened 0.6 percent to 1.727 per U.S. dollar today.

“Petrobras’s earnings disappointed, and while I don’t think that reflects the overall sentiment about corporate earnings this quarter, the shares’ plunge dragged the Bovespa down,” Pedro Galdi, head strategist at brokerage firm SLW Corretora, said by phone from Sao Paulo. “Greece’s problems are still weighing on the market. Global stocks and commodities are falling.”

Petrobras slumped 6.8 percent to 23.78 reais. The MSCI Brazil/Energy Index led declines among 10 industry gauges, sinking 6.7 percent.

Petrobras’s fourth-quarter net income dropped to 5.05 billion reais ($2.9 billion), or 39 centavos a share, from 10.6 billion reais, or 1.07 reais, a year earlier, according to a regulatory filing yesterday. Analysts had expected the company to earn 69 centavos a share excluding some items, according to the average of six estimates in a Bloomberg survey.

Earnings Reports

The decline in Petrobras’s profit reflects higher costs for drilling in deep waters and shouldn’t be taken as a sign that economic growth is faltering in Brazil or that corporate earnings in general are deteriorating, Galdi said.

At least four other companies on the Bovespa index reported fourth-quarter earnings this week, either matching or beating analysts’ estimates. Sugar-cane processor Cosan SA Industria e Comercio, card-payment processor Cielo SA (CIEL3) and retailer Lojas Renner SA (LREN3) outperformed the gauge yesterday after releasing their earnings reports.

Itau Unibanco Holding SA (ITUB4), Latin America’s biggest bank by market value, said in a regulatory filing on Feb. 7 its adjusted net income, which excludes one-time charges, increased 10 percent to 3.75 billion reais. That matched the average estimate among eight analysts surveyed by Bloomberg.

MPX fell 1.8 percent to 47.76 reais.

Cia. Siderurgica Nacional SA (CSNA3), Brazil’s third-biggest steelmaker, declined 2.3 percent to 18.03 reais. CSN, as the company is known, was cut to “underweight” from “neutral” at JPMorgan Chase & Co.

Greek Debt Concern

Global stocks tumbled today, with the MSCI All-Country World index sinking as much as 1.5 percent, amid concern that plans to help Greece avoid default were unraveling.

Greece must pass its latest austerity package into law and identify 325 million euros ($431 million) in spending cuts before euro-area governments endorse a second bailout for the country, Luxembourg Prime Minister Jean-Claude Juncker said. Laos Party leader George Karatzaferis said the roadmap proposed for Greece is wrong and he can’t vote for the accord as is.

The Bovespa has advanced 13 percent this year, after slumping 18 percent in 2011, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10.4 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 7.28 billion reais in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares with a daily average of 6.53 billion reais this year through Feb. 3, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net

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