Ibovespa Drops as Vale’s Earnings Miss Overshadows Renner’s Gain

The Ibovespa fell as iron-ore producer Vale SA (VALE5) tumbled after reporting a quarterly profit that was below analysts’ estimates, overshadowing positive surprises from companies including retailer Lojas Renner SA. (LREN3)

Bradespar SA (BRAP4), Banco Bradesco SA’s unit that’s part of the group that controls Vale, fell to a one-month low. Brewer Ambev SA (ABEV3) tumbled after Brazil said it will raise taxes on beer and soft drinks. Anhanguera Educacional Participacoes SA (AEDU3) rallied after the education company reported preliminary results that showed an increase in profit.

The Ibovespa lost 0.4 percent to 51,626.69 at the close of trading in Sao Paulo. The real gained 0.3 percent to 2.2299 per U.S. dollar at 5:26 p.m. local time. Vale, the third-heaviest weighted stock on the equity index, slipped 1.2 percent to 26.42 reais. Half of the 18 Ibovespa members that have reported first-quarter results trailed analysts’ estimates, while the rest exceeded them, according to data compiled by Bloomberg.

“Vale’s earnings were weak, which ends up having a big impact on the market because of the weighting the stock has on the Ibovespa,” Pedro Galdi, the chief analyst at brokerage firm SLW Corretora, said by phone from Sao Paulo. “A lot of companies reported yesterday and today, and investors are reacting to the results.”

Forty-two stocks dropped on the Ibovespa today while 29 rose. The gauge gained 2.4 percent in April.

Vale’s first-quarter net income declined to $2.52 billion, or 49 cents a share, from $3.11 billion, or 60 cents a share, according to a regulatory filing today. The average of 14 analyst estimates compiled by Bloomberg was for a profit of 53 cents per share, excluding some items.

Beverage Tax

Bradespar retreated 2.1 percent to 19.30 reais.

Ambev slumped 5 percent to 16.30 reais. Brazil will increase taxes on beverages such as beer and soda beginning June 1 as part of efforts to boost revenue after Standard & Poor’s downgraded its credit rating last month, Carlos Alberto Barreto, the head of the country’s tax agency, told reporters in Brasilia yesterday.

Renner added 1.8 percent to 65.60 reais. The Porto Alegre, Brazil-based retailer posted an adjusted net income of 50.9 million reais in the first quarter, which compared with an average estimate of 31.3 million reais among analysts surveyed by Bloomberg.

Anhanguera rallied 6.5 percent to 13.80 reais, the best performance on the Ibovespa, after reporting preliminary results that showed its profit increased 18 percent in the first quarter from a year earlier.

Bear Market

“They don’t usually release previews, but they wanted to improve sentiment about the shares,” Claudio Duhau, an analyst at brokerage Ativa Corretora, said by phone from Rio de Janeiro. “The numbers were positive, though I prefer to wait for the full quarter results.”

Brazil’s benchmark equity index entered a bear market March 14 after falling 20 percent from its October high through that day. The gauge has since gained 15 percent as state-owned companies including Centrais Eletricas Brasileiras SA (ELET6) rebounded.

Trading volume of stocks in Sao Paulo today was 7.56 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 6.7 billion reais this year, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

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

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.