Credit Suisse earnings preview roundup: Positivo, Totvs

Monday, October 17, 2011

Latin American currencies' sharp weakening against the US dollar in 3Q11 is not expected to have a strong effect on the operating results of regional IT companies, but Brazilian computer maker Positivo Informática is seen as being one of the hardest hit, according to a report published by investment bank Credit Suisse.

Unfavorable exchange rates are due to impact Positivo's bottom line as a result of the company's importing raw materials for PC manufacturing to sell finished goods locally.

Positivo, expected to report quarterly results on November 10, should post a weak 3Q11 with an 8% year-over-year top-line drop, pressured by steep competition and increasingly lower prices, according to the bank.

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Notebook volumes are expected increase more than 50%, boosted by the education ministry's one computer per student program, Prouca. On the other hand, desktop volumes should fall 35% to 199,000, mainly due to competition.

The Ebitda margin is seen decreasing to 3.1%, with an Ebitda of 18mn reais (US$10.2mn) for the quarter.


Brazil's largest software group, Totvs, is expected to have mid-single digit top-line growth year-over-year in 3Q11, according to Credit Suisse.

Totvs, set to report quarterly results on October 26, should have a soft quarter in comparison to the unusually strong 3Q10. The company saw a record 3Q10 when global revenues rocketed 20% year-over-year to hit 303mn reais, while license fees revenue jumped 44.5% to 95mn reais.

The group's revenues are expected to expand only 8% year-over-year, as good performance on the maintenance and services lines should be offset by a decline of license sales from the very high base in 3Q10.

In spite of a lower forecasted Ebitda, Credit Suisse believes lower financial expenses should enhance Totvs' bottom line, expanding net profit by 12% in the same comparison.