Centrais Eletricas Brasileiras SA, the power utility that lost two-thirds of its market value over the past year, fell as workers went on strike against a restructuring that includes dismissals and compensation cuts.
Voting shares of Eletrobras, as Brazil’s largest electrical utility by sales is also known, slumped 2.3 percent to 4.62 reais at the close of trading in Sao Paulo, the biggest drop since June 4. The Ibovespa equity benchmark lost 0.5 percent.
The workers’ strike may disrupt the state-run utility’s plan to reduce costs and resume profitability after President Dilma Rousseff ordered power companies last September to lower rates, Pedro Galdi, the chief analyst at the brokerage firm SLW Corretora, said in a phone interview from Sao Paulo. “Eletrobras’s earnings and profits prospects have deteriorated so much in the past months, and this strike makes the scenario worse,” Galdi said.
The Rio de Janeiro-based utility announced last week that 4,088 employees applied for a voluntary layoff program that is part of an effort to reduce expenses by 20 percent this year.
About 70 percent of Eletrobras’s 27,000 employees have been on strike since July 15, according to Aeel, one of the utility’s employee unions. After a meeting today where no agreement was reached, workers will keep striking indefinitely, Emanuel Torres, a director of Aeel, told Bloomberg News. “Eletrobras is throwing the bill for this restructuring in the workers’ lap,” Torres said in a phone interview from Rio de Janeiro.
The utility’s press office said in an e-mailed statement that “there wasn’t any progress in the meeting.”
The union also wants the utility to offer employees that are hired from now on to have the same compensation packages current workers have, while Eletrobras said it’s planning to reduce some benefits for new hires, Aeel’s director said.
Eletrobras’s adjusted revenue fell 27 percent to 6.8 billion reais ($3 billion) in the first quarter of 2013 from a year earlier, according to data compiled by Bloomberg.
The company’s voting shares have declined 65 percent since Aug. 31, 2012, while the Ibovespa has fallen 17 percent during the same period.