Cielo First-Quarter Profit Beats Estimates on Revenue Increase

Cielo SA (CIEL3), Brazil’s biggest card- payment processor by market value, reported first-quarter earnings that beat estimates as revenue increased more than costs.

Net income rose 33 percent to 566.6 million reais ($301.4 million) from 424.7 million reais a year earlier, according to a regulatory filing yesterday. The Barueri, Brazil-based company’s result beat the mean estimate of 511.4 million reais for adjusted net income in a Bloomberg survey of nine analysts.

Chief Executive Officer Romulo de Mello Dias increased the company’s adjusted operating net revenue to 1.4 billion reais in the first quarter, up 29 percent from 1.08 billion reais a year earlier. The cost per transaction rose 6.9 percent to 31 centavos.

Cielo gained market share without deterioration in its merchant discount rate or point-of-sale rental-equipment fees, Francisco Kops and Rafael Ferraz, analysts at Banco J.Safra in Sao Paulo, wrote in a note to clients on April 17.

The combined value of credit-and debit-card transactions grew 26 percent to 88.1 billion reais.

Redecard SA (RDCD3), Cielo’s biggest rival, may be delisted from the Sao Paulo stock exchange as its controlling shareholder, Itau Unibanco Holding SA, is seeking to buy out the company. The Sao Paulo-based bank offered to pay 35 reais a share, or 11.8 billion reais, to acquire the part of the company is doesn’t own.

Cielo rose 29 percent to 51.95 reais in Sao Paulo trading this year, compared with a 10 percent gain for Redecard.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net