Brazil's Hypermarcas sees flat profit margins in 2014

Reuters

SAO PAULO, Feb 24 (Reuters) - Brazilian consumer goods maker Hypermarcas does not expect profit margins to improve this year, executives said on Monday, underscoring the importance of winning market share as consumer spending sputters.

If profit margins improve, the company will invest that additional money in marketing, Chief Executive Officer Claudio Bergamo told analysts on a conference call, in a sign of competition that has consumer companies growing at each other's expense.

Shares of Hypermarcas fell 0.7 percent in Monday trading in Sao Paulo, compared with a 0.3 percent decline in the benchmark Bovespa stock index.

Hypermarcas also plans to reduce its financial expenses, which include interest costs, foreign exchange effects and bond buybacks, by a third in 2014, Chief Financial Officer Martim Prado Mattos told analysts.

Net financial expenses should fall to between 380 million reais and 400 million reais ($161 million to $170 million) this year, down from 583 million reais in 2013.

Financial expenses more than doubled in the fourth quarter from a year earlier because of bond repurchases and a currency swing. Earnings fell 56 percent for the period, Hypermarcas reported late on Friday.

Still, healthy sales of Hypermarcas' disposable consumer goods, from diapers to sweeteners, and a streamlining of the company's factories helped lift operational profit.

Earnings before interest, taxes, depreciation and amortization rose 16 percent to 1.002 billion reais in 2013, excluding one-time and noncash expenses. That beat the company's forecast of 950 million reais.

In 2014, Hypermarcas expects to raise adjusted EBITDA to 1.1 billion reais, it said in a late Friday filing.

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