Souza Cruz closes quarter with stable revenue and high profit

Amid a sharp drop in the volume of cigarettes sold in the first quarter, the Souza Cruz has reduced costs and expenses to ensure profitability.
In spite of stable revenue compared to a year earlier, to $ 1.42 billion, earnings before interest, taxes, depreciation and amortization (Ebitda) grew 4% in the first three months of 2012, to $ 705 million.
Net profit surged to 2.6 percent on the same basis of comparison, to $ 454 million, in line with the preliminary and unaudited results released on day 19.
The production costs of Souza Cruz fell 5.3%, leading to a high gross profit of 2.4%, to R $ 1 billion. The operating margin rose 1.6 percentage points to 70.5%.
Administrative expenses with sales, in turn, fell 0.9% to r $ 338,9 million and the relationship between Ebitda and revenue rose from 47.9% in the first quarter of 2012 to 49.7% in the same period this year.
Spending on interest payments, in turn, prevented a greater advance in the last line of the balance sheet. The financial result was negative at R $ 6.2 million against earnings of $ 22.3 million with financial applications in the first three months of last year.
Falling Volume
The sales volume of cigarettes had a strong recoil of 23.4% over a year earlier to 14.1 billion units — the number that surprised the market in dissemination of preliminary results. With successive IPI increases implemented from 2011, the volume of sales have tumbled, but the decline from the beginning of the year.
In the report that accompanies the balance sheet, the direction of Souza Cruz stressed that the fall should not be repeated in the same magnitude over the next few quarters.
According to the company, the increase in the tax on industrialized products (IPI) implemented in January caused retailers to anticipate your purchases at the end of 2012 to restore stocks under the lower prices.
According to Souza Cruz, despite the sharp drop in trade, there was market gain in relation to the competition. The end of March, the company had 77.2% share, up 3.3 percentage points from a year earlier — suggesting that the smuggled product won the space.
The above price adjustments policy of increasing taxes and the fact in brands with higher added value, however, ensured the stability of revenues from the sale of cigarettes, which was r $ 1.1 billion.
The thread of smoke also export volumes fell by 6.3% over a year earlier. The revenue generated by the Division retreated 8%, to $ 242 million.