Salfacorp Falls in Chile on Profit, Concern on Debt Level

Salfacorp SA (SALFACOR) retreated the most in three months after reporting a 15 percent decline in quarterly profit and as Banco Santander SA (SAN) expressed concern over the debt of Chile’s largest construction and engineering company.

Salfacorp slumped 3.5 percent to 1,060.5 pesos at the close in Santiago, the biggest loss since Aug. 27. The Ipsa benchmark index retreated 0.1 percent. Salfacorp is the worst performer after Multiexport Foods SA (MULTIFOO) among members of the Ipsa over the past 12 months, with a 22 percent slump.

The company had a profit of 2.9 billion pesos ($6 million) in the third quarter, down from 3.43 billion a year earlier, according to a statement filed yesterday with Chile’s securities regulator.

“Although the company did not breach covenants, we are still concerned about the company’s relatively high debt levels,” Santander analysts Nicolas Khaliliyeh, Francisco Errandonea and Rodrigo Ordonez said in a note to clients today.

IM Trust SA, a Santiago-based brokerage, cut its recommendation for Salfacorp yesterday to hold from buy, saying asset sales have supported the company’s earnings before interest, taxes, depreciation and amortization, or Ebitda, in the past two quarters.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

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