Record profits power up investments
Folha de S. Paulo - 11/25/2007
The largest public traded Brazilian companies (listed in the Stock Market) have never had so high profits as in 2007. The results of the year may guarantee strong investments in 2008, despite the uncertainties of the international scenario. The bet is that the domestic market will continue being, like this year, the flagship of growth. A foreign crisis of greater intensity may, however, diminish such optimism. The balance sheet of 220 companies published up the previous week show that in the first three quarters of this year the companies sold R$ 368.6 billion (US$ 212 billion) and had net profits of R$ 39.2 billion (US$ 22.53 billion). These are absolute records for this survey, carried out by Folha to Economática, an economics consulting company. The net profits among these 220 companies in nine months were 45.6% greater than in the same period of 2006. In the year, the São Paulo Stock Market, where the stocks of these companies are traded, has gone up 37%. In 2007, there was also a relevant fall in the level of indebtedness of the sampled 220 companies (the financial expenditure fell from R$ 10.1 billion /US$ 4.64 billion in 2006 to R$ 2.8 billion /US$ 1.61 billion this year) and an increase from 8% to 11% in the net margin of profits in the businesses. The reduction in the level of indebtedness was strongly connected to the fall of the dollar, whose depreciation accumulates 14% in the year, which reduced the external liabilities. The final results of 2007, which are to be even more robust after the sales of the last quarter, tend to guarantee strong investments for the next years.