Abril Falls Most in Two Years as Brazil Reduces Book Purchases
The shares tumbled 7.5 percent to 31.75 reais at 1:06 p.m. in Sao Paulo, the worst performance on the BM&FBovespa Small Cap Index, which slid 0.1 percent. Earlier today they lost 8.4 percent, the steepest intraday drop since August 2011.
Brazil’s federal government will buy 30 million textbooks from Abril for public-school students in 2014, the company said in a regulatory filing yesterday after the market closed. That compares with 44.8 million books this year, according to a statement on Abril’s website.
“We see the announcement as negative, as it adds uncertainty to a business that was seen by investors as defensive,” Joao Carlos Santos and Pedro Montenegro, analysts at Grupo BTG Pactual, wrote yesterday in a research note.
The investment bank cut its estimates for Abril’s earnings before interest, taxes, depreciation and amortization in 2013 by 6.5 percent to 303 million reais.
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