Monday, 16 March 2009

Brazilian Corporate Profits Plunged About 50 Percent in Fourth Quarter as Financial Expenses, Value of Dollar Soared

Economática, a São Paulo-based economic research company, said net income at 85 listed Brazilian companies tumbled 50 percent in the fourth quarter, pressured by a surge of 363 percent in the cost of borrowing and the rise of 22 percent in the price of spot dollar.

Financial expenses rose to 9.1 billion reais in the quarter from about 2 billion reais a year earlier. The stock of debt for all those companies surged 50 percent (without taking into account inflation for the year) to 188 billion reais ... this should make us think that the derivatives situation is probably worse than we are imagining.

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