Positivo's profits fall 74.4% in 4Q10

Wednesday, March 2, 2011

Brazilian computer maker Positivo Informática (Bovespa: POSI3) saw net profits plummet 74.4% year-on-year to 12.3mn reais (US$7.4mn) in the fourth quarter of 2010, the company said in a statement.

PC price deflation due to increased competition from international challengers "jeopardized" Positivo's bottom line, according to the firm. Clients paid 12% less on average for computers, including 23.4% less for notebooks, in 4Q10 versus 4Q09.

"This dynamic was even more apparent in the second half of the year, when substantial price reductions were maintained for several months, affecting the profitability of the entire industry," the company said. "However, this price lowering trajectory is believed to be almost over, as prices possibly reached a reduction limit at year-end."

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While sales tags slimmed, costs for raw materials and labor increased 14.4% and 36.4%, respectively, year-over-year. Positivo's net revenues dropped to 590mn reais, down 3.9% from 4Q09, while its Ebitda, adjusted for investment subsidies, fell 98.5% to 1mn reais. The manufacturer's market share slid slightly year-on-year, but realized a one percentage-point rebound from Q3 to Q4, including a 4.6-point boost in the retail market.

For the year, Positivo's profits declined 25.2% to 95.6mn reais in 2010. The company registered yearly revenues of 2.33bn reais, up 7.1% from 2009, and 143mn reais in Ebitda, a 19.3% drop.

Positivo expects 14.3% market growth overall for 2011 but did not provide exact company projections. The PC maker plans to invest 52.2mn reais this year, up from 43.8mn reais in 2010, with the increase coming in research and development.