Sao Martinho Declines in Sao Paulo as Earnings Trail Estimates

Sao Martinho SA (SMTO3), the owner of the world’s largest sugar-cane processing plant, declined after reporting earnings that trailed analysts’ estimates for a second straight quarter.

The shares dropped 2.2 percent to 25.43 reais at 2:03 p.m. in Sao Paulo, snapping two days of gains. The benchmark Ibovespa (IBOV) gauge advanced 1.3 percent.

The company posted adjusted net income of 12.7 million reais ($5.7 million) for the fiscal fourth-quarter ended March 31, according to data compiled by Bloomberg after the company reported the results late yesterday. The average estimate of six analysts was 26.5 million reais.

While the results will probably “have a marginally negative impact on shares,” Banco Santander SA analysts including Christian Audi reiterated in a research note a buy recommendation, citing the company’s “cheap valuation, better-than-expected guidance for the fiscal 2014 harvest, and a substantial portion of sugar exports hedged at healthy levels.”

The Pradopolis, Brazil-based company forecasts sugar output of 996,000 tons for the 2013-2014 season, compared with 970,400 in the prior period. Ethanol output is projected to rise 43 percent.

Sao Martinho has fallen 9.2 percent this year, while the Ibovespa has plunged 24 percent.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.