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Redecard Profit Beats Estimates as Company Controls Expenses

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April 19 (Bloomberg) -- Redecard SA, the Brazilian card-payment processor that Itau Unibanco Holding SA is seeking to buy, said its first-quarter profit rose 36 percent, beating estimates, after the company controlled expenses by reducing headcount.

Adjusted net income, which excludes some items, advanced to 381.2 million reais ($202.9 million) from 281.3 million reais a year earlier, the Sao Paulo-based company said yesterday in a regulatory filing. The result was above the mean estimate of 367.1 million reais in a Bloomberg survey of nine analysts.

Operating costs declined 3.5 percent to 134.8 million reais as the company reduced its workforce to 952 employees from 1,054 at the end of 2011, following the reorganization led by Chief Executive Officer Claudio Yamaguti, the company said in the statement.

“The company managed to keep costs and expenses under control, despite reversing some of the cuts in client services made during the fourth quarter,” Carlos Firetti, Gustavo Lobo and Bruno Chemmer, analysts at Bradesco BBI, wrote in a report sent yesterday after the earnings were announced.

The combined value of credit-and debit-card transactions increased 12 percent to 57.7 billion reais, and total cost of services fell 0.6 percent to 246.4 million reais.

Itau, which owns 50 percent of Redecard, offered to pay 35 reais a share, or 11.8 billion reais, to purchase the rest of the card-payment processor Feb. 7. The Sao Paulo-based lender expects to hold an auction to buy out the lender between July and August, Chief Executive Officer Roberto Setubal said in a conference call April 16.

Redecard fell 0.9 percent to 32.15 reais in Sao Paulo, while its biggest rival Cielo SA rose 0.2 percent to 60.94 reais.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net

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