Ibovespa Leads Declines in Americas Amid Disappointing Results

  • Companies report earnings that trail analyst estimates by 21%
  • Gol surges on speculation govt to boost foreign capital limit

The Ibovespa led losses in the Americas on concern that results at companies from BRF SA to CCR SA are being dragged down by the worst recession in a century.

Food processor BRF sank the most in four months after reporting weaker-than-expected sales and a management reshuffle. CCR, which manages highways, slumped after disappointing earnings. Gol Linhas Aereas Inteligentes SA surged 15 percent on speculation the government will increase the limit on foreign investment in airlines.

Average sales surprise for Ibovespa companies

Brazilian companies are suffering from the contraction in Latin America’s largest economy at the same time inflation is running at more than double the official target and the government is struggling to shore up the budget. Earnings for Ibovespa’s companies dropped by an average 10 percent last quarter, while trailing analysts’ estimates by 21 percent, according to data compiled by Bloomberg.

“Brazilian companies suffered a lot last year and have very negative prospects for 2016,” said Vitor Suzaki, an analyst at brokerage Lerosa Investimentos in Sao Paulo. "Considering the uncertain corporate scenario, markets are getting more cautious."

The Ibovespa fell 0.7 percent to 41,593.08 at the close of trading in Sao Paulo. Its price-to-book ratio, or assets after subtracting liabilities, was near 1 -- about half the valuation of global stocks. The real dropped 1.1 percent to 4 per dollar.

BRF contributed the most to the Ibovespa’s decline after also the economy is dragging on results amid more competition in Brazil. The company announced the that both its chief financial officer and the general manager are stepping down.

"On top of what we see as lackluster business trends, we don’t think markets will welcome the replacement of both," Pedro Leduc, analyst at JPMorgan Chase & Co. in Sao Paulo, wrote in a note to clients.

CCR posted the longest slide since Jan. 18.

Oi SA, Brazil’s most indebted phone company, extended a four-day plunge to 27 percent after Russian billionaire Mikhail Fridman withdrew his proposal to help finance a merger between the carrier and Telecom Italia SpA’s Brazilian unit.

Gol posted its biggest monthly gain since at least 2004 after newspaper Folha de S. Paulo said that Brazil will propose boosting the limit for international participation in airlines to as high as 49 percent from 20 percent.

Pulp producers Suzano Papel e Celulose SA and Fibria Celulose SA rallied as a drop in the real bolstered the outlook for sales outside Brazil.

Before it's here, it's on the Bloomberg Terminal.