The signs of improvement in the domestic economy at the beginning of the year mitigated the impacts of the first 15 days of the new coronavirus crisis on the balance sheets of publicly traded Brazilian companies in the first quarter of 2020. However, the surge in the dollar, which gained strength from the end of the carnival, it was enough to sour the result of the operations. Even with a cashier reinforced by R $ 110 billion, compared to the same period in 2019, companies experienced a drop of almost 70% in its net profit.

The data are part of a study carried out by Economics, obtained exclusively by Estadão. Were analysed 183 companies with shares traded on B3 and who published their financial results until 6 pm yesterday. The study, however, excludes Petrobrás, JBS, Suzano and Azul from the list, which, according to Economática’s institutional relationship manager, Einar Rivero, obtained an unusually high loss and, therefore, would undermine the economic analysis of the period.

With the exception, the current balance sheet season shows that Brazilian companies have significantly improved their cash generation – money kept available for short-term revenues. The companies’ cash position closed the quarter at R $ 329.8 billion, against R $ 220 billion in the same period of 2019, an increase of 49.4%. Operating income (before interest amortization on loans and taxes) jumped 30% in the period. And this was only possible, according to Rivero, because of the improvement registered with the sales of products and services, which reached the amount of R $ 336.8 billion, up 8.8%. “The results show that, to a certain extent, companies did their homework from the gatekeeper inside. But when they leaned against the counter of banks and creditors, they saw expenses increase a lot,” he says.

Dollar

Most responsible for this explosion in debt, which decimated R $ 39 billion in operating profit, was the escalation of the dollar. From the first trading session in January to the last in March, the spot commercial dollar appreciated by 29% against the real, initial quote from R $ 4.02 to R $ 5.19. It was the third largest quarterly appreciation of the dollar since the Central Bank’s adoption of the floating exchange rate in 1999, second only to the third quarter of 2002 and the first quarter of 1999.

Data produced by Fipe, indicate that large Brazilian companies – with open and closed capital – they have 58% of their total debt fixed in foreign currencies. According to the BC, the total dollar debt of companies in Brazil is US $ 482 billion. “From the point of view of what has passed, we can say that the dollar has strongly affected the balance sheets of Brazilian companies. Looking ahead, for the second quarter, it is difficult to imagine a new fall at this level”, says the coordinator of the Fipe Capital Markets Research Center (Cemec-Fipe), Carlos Antonio Rocca. “But that should not be taken as something positive. The drastic reduction in consumption during the crisis will bring to companies another challenge, which will be in sales revenue, which should drop tremendously in the balance sheets of the second quarter,” he says.

Results

By sector, financial, paper and cellulose and energy companies had their balance sheets most affected by the increase in financial expenses. Klabin, for example, recorded in the first quarter an increase of 8% sales revenue, compared to the same period last year, but saw its expenses with debts jump from R $ 597 million to R $ 6 billion in 12 months. As a result, it suffered a net loss of R $ 3.2 billion.

Klabin’s financial and investor relations director, Marcos Ivo, explainshowever, that this is a purely accounting loss, a result that bothers the balance sheet, but not directly in the company’s pocket. “Our debt is high in dollars, about 89% of the total, but it is long term, on average, 9.4 years, and more than 50% of our revenue is also dollar. With that, we have a natural hedge “, he says. Hedge is the name given to the instruments of protection against exchange rate variation adopted by companies.” Our relationship is well balanced, in the end, we are creditors in dollars “, he says.

Another that saw its financial expense jump was the Course, a railway logistics company controlled by Cosan. This indicator increased from R $ 324 million in 2019 to R $ 531 million in 2020, a factor that helps explain the loss of R $ 272 million in the period, compared to net income of R $ 26 million in the first quarter of 2019. For the company’s financial director, Ricardo Lewin, in addition to specific issues, such as a higher volume of rain in March, which hindered the operation for a company in the Port of Santos, the company also changed the way of measuring foreign exchange protection expenses. “This brought a negative result in the quarter, but that should not be registered in the next balance sheet”, says the executive.

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