Eletropaulo Falls After Earnings Miss Forecasts: Sao Paulo Mover

Eletropaulo Metropolitana Eletricidade de Sao Paulo SA, the Brazilian utility unit of AES Corp. (AES), had the biggest drop in two weeks after earnings fell more than analysts forecast.

Eletropaulo fell 4.2 percent to 28.47 reais in Sao Paulo trading, the most since April 17. The Bovespa benchmark index fell 2.1 percent.

The Sao Paulo-based electricity company posted net income of 110.2 million reais ($57.4 million) in the first quarter, down 61 percent from 281.9 million reais a year earlier, according to a regulatory filing yesterday. The result missed the 199 million reais average forecast of seven analysts surveyed by Bloomberg.

Eletropaulo also said it may record expenses of 212 million reais per quarter in coming periods due to tariff parameters released by Aneel, the country’s energy regulator.

Aneel proposed on April 10 that Eletropaulo lower its tariffs by 8.81 percent. The change is subject to a public hearing.

“The company’s results were weaker than our (and consensus) forecasts,” Santander analysts Marcio Prado, Danilo Vitti and Carolina Carneiro wrote in a report to clients. “We maintain our negative view on the name, as we foresee a significant negative impact on Ebitda following the tariff revision and downside risk relative to our estimates.”

The analysts rate the stock the equivalent of sell.

To contact the reporter on this story: Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net

To contact the editors responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net Helder Marinho at hmarinho@bloomberg.net