21 May 2009 | Brazil Economic Scan

21-May-2009

Brazil Economic Scan

In this edition: Brazil economy to expand 1% says ministry, Perdigao-Sadia merger to create world poultry giant, Maritima sees growth after Sompo stake sale, Drogasil to add 40 drugstores in 2009, the Bovespa closed down slightly.

Top headlines

Brazil Economy to Expand 1% This Year, Ministry Says

• Latin America’s biggest economy will grow 1% this year, a forecast reduced from 2%, the Budget Ministry said. Economists expect gross domestic product to shrink 0.49%, according to the median estimate of analysts surveyed May 15 by the central bank.
• The ministry said it has room to increase public spending by 9.1 billion reais ($4.5 billion) this year, after it reduced its target for a primary budget surplus, or surplus before interest payments, by 23.7 billion reais, according to the Budget Ministry statement. (Bloomberg)

Brazil merger to create major world poultry giant

• The combination of Brazilian food companies Perdigao and Sadia creates a global behemoth that looks poised to dominate the world poultry market.
• The deal brings together Brazil's two biggest poultry and pork producers, creating a company called Brasil Foods with annual sales of more than 22 billion reais ($10.59 billion). The two companies held a combined market share just shy of 25 percent. (Reuters)

Brazil Maritima sees growth after Sompo stake sale

• Brazilian insurance company Maritima expects to grow sharply in the next 5 years after selling a stake to Yasuda, a local unit of Sompo Japan Insurance Inc, the Brazilian company's finance chief said on Wednesday.
• Maritima aims to be among the country's top five insurers by sales in five years, climbing from its current position as 10th largest, after selling the 50% stake to Sompo for 336 million reais ($166.4 million), Maritima's Milton Bellizia said. (Reuters)

Brazil’s Drogasil to Add 40 Drugstores as Crisis ‘Never Came’

• Drogasil has set aside about 40 million reais ($19.6 million) for new stores, CEO Roberto Ely said. The company added 46 locations last year and gained 20 more so far in 2009, bringing its total to 264.
• “We’ve established a rhythm of opening 40 stores a year, which is a number we can easily absorb into our structure,” Ely said. “Since last year people have talked about the crisis but nobody knew how long or strong it would be. In our industry, apparently, it never came.” (Bloomberg)

Bovespa Falls for a Second day as Builders Tumble; Bolsa Rises

• The Bovespa erased gains in the last hour of trading for a second day, joining a slide in U.S. stocks after the Federal Reserve predicted a deeper recession. The index slipped +0.2% to 51,245.09. The BM&FBovespa Small Cap index dropped +1.1% to 694.59.
• Cyrela, Brazil’s biggest homebuilder, fell -3.5% to 14 reais. Gafisa SA, the second-largest, sank -4.1% to 18.60 reais. Rossi Residencial SA declined -3% to 7.71 reais. Brazil’s homebuilders rose 78 percent this year, on average, according to Goldman. (Bloomberg)

Source: Brazil Economic Scan