Most Brazilian Stocks Decline as Natura Sinks on Earnings Miss

Most Brazilian stocks dropped as Natura SA led consumer companies lower after the cosmetics maker’s quarterly earnings trailed analysts’ estimates, outweighing gains in lenders.

Cigarette maker Souza Cruz SA fell to a two-week low. Steelmaker Usinas Siderurgicas de Minas Gerais SA sank in the worst performance on the MSCI Brazil/Materials Index. Banco Bradesco SA (BBDC4) advanced the most in a week after reporting first-quarter profits that exceeded forecasts.

The Ibovespa gained less than 0.1 percent to 51,618.30 at 3:36 p.m. in Sao Paulo, with 38 stocks lower and 32 higher. The real was little changed at 2.2205 per U.S. dollar. Natura’s first-quarter adjusted net income fell 6 percent to 117.2 million reais from a year earlier, compared with an average estimate of a profit of 139.3 million reais among six analysts surveyed by Bloomberg.

“Today’s stock market losses reflect investors’ concern about Brazil’s growth this year, which hasn’t eased,” Antonio Goes, a senior analyst at the brokerage firm TOV Corretora, said in a phone interview from Rio de Janeiro. “There’s still a lot of uncertainty.”

Natura slumped 4.4 percent to 38.41 reais, the worst performance on the MSCI Brazil/Consumer Staples Index. Souza Cruz slipped 1.9 percent to 21.57 reais. A close at that level would be the lowest since April 9. Usiminas, as Usinas Siderurgicas is known, sank 5.5 percent to 8.98 reais. Bradesco added 1.8 percent to 33.59 reais. A close at that level would be the highest since May 2013.

Growth Outlook

Bradesco reported first-quarter adjusted net income of 3.47 billion reais, exceeding the average estimate of analysts.

“Brazilian banks manage to perform well even in times when the economy is not doing so great, and Bradesco’s numbers, which were above expectations, show that strength,” Goes said. “Consumer stocks, on the other hand, will probably still suffer this year.”

Banks have maintained profit growth amid sluggish economic growth and fast inflation as they increased lending, sold more secondary products such as insurance and cut jobs, Goes said.

Economists covering Brazil cut their estimates for the country’s gross domestic product growth this year to 1.63 percent from 1.65 percent, according to a survey by the central bank published April 22.

Trading volume of stocks in Sao Paulo yesterday was 6.12 billion reais, compared with a daily average of 6.74 billion reais this year, according to data from the exchange.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Richard Richtmyer, Dennis Fitzgerald

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