Most Brazilian Stocks Drop as Natura Tumbles on Earnings

Most Brazilian stocks dropped as first-quarter earnings reports sparked concern that economic weakness is curbing corporate profits.

Cosmetics maker Natura Cosmeticos SA fell the most in a month after income trailed forecasts. Banco Santander Brasil SA slumped as its earnings statement showed that revenue stagnated on slower expansion in credit and increased loan delinquency. Airline Gol Linhas Aereas Inteligentes SA rose after O Estado de S.Paulo reported that Brazil may cut taxes on jet fuel.

The Ibovespa equity benchmark was little changed at 54,963.32 at the close of trading in Sao Paulo. Eight of the nine companies on the index that have reported first-quarter results posted lower-than-forecast sales while four missed earnings forecasts, according to data compiled by Bloomberg. Brazil’s economy expanded 0.9 percent in 2012, less than any major emerging market, according to data released by the national statistics agency on March 1.

“The Bovespa’s performance from now on will depend on the first-quarter earnings companies will report,” Sandro Fernandes, a trader at brokerage Corval, said by phone from Belo Horizonte, Brazil. “We’ve had some reports that were not so good, such as Natura’s. This earnings season will give a direction to the equity market.”

Natura dropped 3.1 percent to 47.50 reais. Santander slipped 3 percent to 14.13 reais. Gol advanced 4.7 percent to 13.81 reais.

Forty-four of the Ibovespa’s 69 members fell today. The real strengthened 0.4 percent to 2.0013 per dollar.

Vale Climbs

The Ibovespa rose as much as 1 percent in intraday trading as iron-ore producer Vale SA gained after reporting first-quarter net income of $3.11 billion, or 60 cents a share. The average estimate of analysts compiled by Bloomberg was for per-share profit excluding some items of 55.8 cents.

Vale climbed 1.4 percent to 32.55 reais.

Commodity shares advanced, following raw-materials higher as a report showed fewer Americans than forecast filed first-time claims for unemployment insurance payments last week. The Bloomberg Base Metals 3-Month Price Commodity Index added 1.9 percent.

Steelmaker Usinas Siderurgicas de Minas Gerais SA gained 2.1 percent to 10.62 reais, while iron-ore producer MMX Mineracao & Metalicos SA rose 1.9 percent to 2.17 reais. The MSCI Brazil/Materials index was the best performer among 10 industry groups.

Relative Value

The Ibovespa has retreated 13 percent from this year’s peak on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index of shares in Brazil, Russia, India and China has lost 6.9 percent over the same period.

Brazil’s benchmark equity gauge trades at 11.2 times analysts’ earnings estimates for the next four quarters, compared with 10.5 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 7.38 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.67 billion reais this year through April 23, according to data compiled by the exchange.

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