Eletrobras Slumps on Strike Over Restructuring: Sao Paulo Mover
Centrais Eletricas Brasileiras SA (ELET3), 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 2.5 percent to 4.61 reais at 2:02 p.m. in Sao Paulo after earlier declining as much as 6.1 percent, the biggest intraday drop since June 20. The Ibovespa (IBOV) 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 costs by 20 percent this year.
About 70 percent of Eletrobras’s 27,000 employees have been on strike since July 15, according to Eduardo Almeida, a director of Aeel, one of the utility’s employee unions.
“We’re meeting with Eletrobras’ management this morning to discuss wages and policies for employees,” he said in a phone interview from Rio de Janeiro.
The utility’s press office didn’t immediately respond to a phone call and e-mail from Bloomberg News seeking comment.
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.
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