Brazil to Extend Emergency Aid to Poorest as Unemployment Rises
(Bloomberg) -- Brazil’s government will announce today the extension of an aid to informal workers for a few more months, seen as crucial to poorest people amid pandemic impacts on the economy. Country’s unemployment rose in May to 12.9% from 12.6% in April, according to the national statistic agency.
Primary deficit hit 131.4 billion reais in May from a deficit of 94.3 billion reais in previous month, the central bank said.
Search and arrest warrants are being carried out against people linked to the Amazonas state governor, Wilson Lima, in an investigation about misuse of public funds aimed at fighting the Covid-19 pandemic, according to a statement from federal prosecutors. Amazonas’s press office didn’t immediately respond to an emailed request for comment from Bloomberg, and calls to the telephone number listed on its website went unanswered.
Brazil reported 24,052 new Covid-19 cases in the last 24 hours, bringing the total to 1,368,195, while deaths rose 692 to 58,314, according to the Health Ministry’s website.
Here’s a summary of the latest measures taken by Brazilian companies:
June 30: Government try to reverse meat plants suspension
Brazil asked China to explain the imports suspensions from some Brazilian meat plants and started negotiations for the bans to be overturned, according to the Agriculture Ministry. Recently, China has tightened its imports rules from meat units due to Covid-19 outbreaks.
Retail bank BTG Pactual, controlled by billionaire Andre Esteves, raised 2.65 billion reais in an offer of units -- each one consisting of voting and non-voting shares -- priced at 74.40 reais, compared to Monday’s close of 76.00 reais. Online brokerage XP Inc. announced that holders will sell 19,535,420 Class A commom shares, which would raise almost $1 billion at the stock’s current price of $43.52, with additional allotment.
Petrobras’s refineries in Brazil increased oil-processing in May but are still operating below pre-Covid-19 levels.
June 27, 28 and 29: JBS’s unit suspended to export to China
Brazil’s Agriculture Ministry suspended the approval for a JBS chicken plant in Passo Fundo, Rio Grande do Sul state, to export to China. The unit, which had been shut by a Brazil Labor Court last week amid a coronavirus outbreak, was allowed to partially resume operations for four days to prevent food from turning bad. JBS declined to comment on unit’s export suspension to China and said it won’t comment on ongoing legal disputes. Competitor Marfrig arranged a financing with banks to substitute the bridge loan in the amount of $500m contracted at the time of the transaction.
Petrobras’ oil carrier subsidiary Transpetro announced a Voluntary Redundancy Plan expected to reach 552 million reais ($100.7 million) by 2025 on saving expenses. Firm sees 557 employees signing up. Automotive components producer Iochpe said bondholders approved granting prior waiver and forgiveness of the financial index.
Antitrust regulator Cade will not approve Cielo-Facebook deal for payments and transfers via WhatsApp, O Globo newspaper said, citing unnamed Cade’s members. Drugstore chain Panvel plans a follow-on offering which could raise as much as 800 million reais, website Brazil Journal reported, while malls operator Iguatemi will close again a unit located in Sao Paulo state downcountry to non essential services.
Lender Itau Unibanco’s high-income segment had inflows of 4.1 billion reais in March, a record ever, according to the bank.
June 26: Vale reaches agreement at Itabira
Vale reached an agreement with labor prosecutors in Brazil over Covid-19 procedures, such as testing, social distancing and use of protective equipment, in its Itabira iron-ore complex, which stayed closed for some days early this month due to a coronavirus outbreak among workers.
Malls manager Aliansce Sonae reopened Grande Rio Mall, in Rio de Janeiro state, with reduced hours. Weapons manufacturer Taurus’s board authorized company to sign an agreement with banks asking to postpone June 2020 payment and proposing the rescheduling of about 123 million reais. Following IPOs and oferrings resuming in Brazil, drugstore chain Pague Menos filed for an intial public offering.
June 25: Azul cut journey; Sanitation bill approved
Airline Azul said it reached a 18 months deal with flight attendants and pilots unions to cut working hours and wage, while Gol’s CEO Paulo Kakinoff said final terms for a credit aid to airlines may be presented by the end of next week and government is considering purchasing 100 million reais ($ 19 million) of advanced tickets from the firm.
Senators have approved an new sanitation bill, which facilitates private companies entry in the sector and potential privatization of water utilities. The bill is now pending presidential approval to become a law.
Payment firm Cielo approved its second buyback shares program this year and roads operator EcoRodovias saw its consolidated traffic volume sinking 19.7% yearly in the period between March 16 and June 23.
June 24: WhatsApp Payments Halted
Brazil’s Central Bank suspended the use of WhatsApp to make Visa and Mastercard payments and transfers to preserve an adequate competitive environment, while it verifies if payment arrangements follow the rules and if there are potential risks to the system. Antitrust regulator Cade took a similiar measure, saying that WhatsApp’s base of millions of users is “difficult to replicate by Cielo’s competitors, especially if the agreement under investigation involves exclusivity between the companies”. Cielo said that it has suspended the service right after it received regulators decisions.
Malls operator Aliansce Sonae approved a shares buyback program and canadian miner Aura Minerals announced an initial primary and secondary public offering on Brazilian stock exchange.
Energy regulator Aneel gave its final approval to a 16.1 billion reais ($ 3.1 billion) aid to electricity companies.
June 23: Malls closed again
Malls operators Aliansce Sonae, Iguatemi announced the closing of five malls in differents states as social restrictions are reimposed in some cities, such as Porto Alegre, as Covid-19 cases jump. Essential activities are the only ones allowed to stay open in those malls. Competitor Multiplan did the same with its operations in Canoas, Rio Grande do Sul.
State lender Caixa Economica Federal hit a record level of payroll loans on June 19 and the bank is mulling keeping some employees working from home even after the pandemic, said Caixa CEO Pedro Guimaraes. Banco do Brasil, Bradesco and Itau Unibanco are drawing up a similar initiative, Valor newspaper said.
Toyota has reopened three units in Brazil and a full restart is expected by June 25. Yesterday, Nissan announced the dismissal of 398 workers at its Resende unit, in Rio de Janeiro state.
June 20, 21 and 22: Share offerings
BTG Pactual announced a share offer up to 28.5 million units -- a package with ordinary and preferred shares -- which could raise as much as 2.57 billion reais ($480.7 million), with the aditional allotment, based on June 19 prices. Food retailer IMC, which operates the KFC and Pizza Hut brands, called a shareholders meeting for July 6 to discuss possible funding through a public share offering or a capital increase with private subscription. Environmental management group Ambipar said its IPO price range is between 18.75 reais and 24.75 reais, with pricing scheduled for July 9.
Retailer B2W signed a deal to sell the products from more than 1,900 stores in 11 shopping malls operated by Ancar Ivanhoe on its marketplace.
Auto parts and road implements producers Fras-Le and Randon posted drops of 13.6% and 29%, respectively, on net revenue in May from last year. Honda brought forward to July 13 the resumption of activities in two plants located in Sao Paulo state.
June 19: CVC restarts; Localiza buyback
Tourism agency CVC plans to resume 100% of its activities in July, consolidating part of its brands over the next 12 months, and is also drawing up a capitalization that may be concluded in 15 days, Valor Economico said, citing firm’s CEO Leonel Andrade. Car rental firm Localiza approved a share buyback program of as much as 50 million shares.
Oi’s rating was downgraded by S&P to CC. Utility Cemig postponed to December 200 million reais ($37.4 million) in interest on equity payments, while Copasa said it will not pay 400 million reais on extraordinary dividends. Metalfrio said it’s considering a primary share offering.
Petrobras’s refinery output rebounded to near pre-pandemic levels.
June 18: Vale resumes Itabira, Petrobras M&A
Labor authorities allowed Vale to resume operations at its Itabira complex, in Minas Gerais state, which accounts for a 10th of the firm’s output. The company said it will restart activities gradually and there is no need to revise 2020 output guidance, and also announced a plan to reopen its Voisey’s Bay mine in Canada, which has been in care and maintenance since March.
Petrobras is resuming plans to sell its $1.8 billion stake in fuel distributor BR Distribuidora in the second-half of 2020, Reuters reported. The oil producer confirmed its interest on selling the stake but said there are no details, while BR Distribuidora said it’s not conducting any study or work to issue shares.
Diagnostics firm Alliar said 15 of its units remained closed, down from 45 in mid-March. Steelmaker CSN told distributors it’s readjusting steel prices starting July 1st as the Brazilian real falls and iron ore prices jump, Estado newspaper said. PSA will reopen two units in the city of Porto Real, Rio de Janeiro state, by June 23, Valor said.
June 17: Azul, Petrobras
A codeshare agreement between airlines Azul and Latam has government support, Valor newspaper said.
Petrobras slashed oil-processing at its refineries to the lowest in 20 years due Covid-19 pandemic.
Even with coronavirus effects starting in mid-March in the country, real estate developer Helbor reported net income for the first quarter of 5.45 million reais, reversing a 39.3 million reais loss seen in the same period last year.
June 16: Embraer cut to junk; B2W-McDonald’s deal
Airplane producer Embraer was cut to junk by S&P, with a negative outlook. The ratings firm estimates commercial planes deliveries to fall 50% this year and a $800 million cash burn due to the coronavirus crisis effects. Embraer also announced it has concluded negotiations for a $600 million loan agreement with public and private banks.
Retailer Via Varejo priced its shares at 15 reais ($2.9) each and raised 4.46 billion reais in a share ofering, while competitor B2W signed a deal with McDonald’s to sell the fast food chain’s products on its sales platforms. Malls operator Aliansce Sonae reopened another three shoppings centers.
Energy regulator Aneel postponed to July 31 a measure that forbids utilities to cut power to residential consumers and essential services due to unpaid debts.
Airlines Azul and Latam announced a codeshare agreement for routes in Brazil, which also includes their loyalty programs.
June 13, 14 and 15: JBS, Fleury
A court rejected an appeal presented by JBS and will have to keep a chicken plant in Trindade do Sul, Rio Grande do Sul state, halted.
Malls operator BR Malls resumed operations of seven more shoppings centers, totaling 20 reopened malls. Oil producer Petrobras asked to halt its debts with suppliers from chartering ships used on offshore support, Valor said.
Facebook’s WhatsApp messenger launched a payments feature in Brazil, the app’s second-biggest market with more than 120 million users. The Facebook unit will charge business owners a fee for purchases and is partnering with Cielo, Brazil’s largest payments company, to process payments.
June 11, 12: Vale, malls
Labor prosecutors in the northern state of Para said they began investigating potential shortcomings in Covid-19 measures at Vale’s Carajas complex -- which accounts for 8% of world iron ore supply, according to UBS Group AG. Vale said that preventative measures have already been shared with the prosecutors.
Malls operator JHSF resumed operations in Shopping Cidade Jardim in Sao Paulo, while competitors Aliansce Sonae and Multiplan did the same with another seven malls each.
Meatpacker JBS was again ordered to shut a beef slaughterhouse in Sao Miguel do Guapore, Rondonia state, for failing to comply with requirements previously ordered by the court. JBS said it does not comment on lawsuits in progress and that it adopted a strict prevention protocol against Covid-19 in all its plants.
Airline Gol said there are no talks to postpone payment of a $300 million loan due in August. Car rental firm Movida said service revenue fell about 35% in April from the first quarter in unaudited numbers. Oil and gas distributor BR Distribuidora posted a 51% drop in net income amid the crisis.
June 10: Azul recovery, JBS
Airline Azul’s RPK rose 51.6% in May from April, while the load factor hit 72%. The company will resume flights to six additional domestic destinations and plans to more than double the number of daily flights to 240 in July.
Meatpacker JBS reversed a previous court order to halt pork plant output at it Caxias do Sul unit, Rio Grande do Sul state, for 14 days. Oil and gas distributor BR Distribuidora postponed its interest on equity payment.
Malls in the city of Sao Paulo will likely reopen with limited hours on Thursday, local media reported, a day before Brazil’s valentine’s day holiday.
June 9: Share offerings, Vale
After halting its Itabira complex due to a virus outbreak, Vale is in talks with labour prosecutors to solve the problem and would only review its 2020 output guidance if impacts exceed 15 million tons, said Estado newspaper. Steelmaker CSN renegotiated some 300 million reais in debt which initially was due this year.
Airline Gol foresees a 90% decrease in capacity in the second quarter, and a 290% jump in the third quarter.
National development bank BNDES announced the creation of a 2 billion reais credit line to hospitals and medical laboratories. Malls operator Aliansce Sonae has reopened 11 of its shoppings centers, while competitor BR Malls said has already resumed operations at 13 malls. Shoes producer Vulcabras’s net income fell 66% in the first quarter from same period last year amid the Covid-19 crisis.
June 6, 7 and 8: Vale, JBS have to shut units
Vale was ordered by a Brazilian labor court to halt mining at the Itabira complex, which accounts for about a 10th of its output, after 188 workers tested positive for Covid-19. The firm said there’s no need to cut export guidance for now. Meatpacker JBS was also ordered to halt its pork plant at Caxias do Sul, in Rio Grande do Sul state, for two weeks due to a coronavirus outbreak at the unit. JBS declined to comment citing pending legal dispute, but said employee health is a top priority.
Oil producer Petrobras said it exported a record 1.11 million tons of fuel oil in May, and plans to reorganize management positions, which will be cut in about 25% to reduce costs, Valor Economico newspaper said. Utilities may start to receive aid from government on June 12 as soon as energy regulator Aneel approves, Estado reported.
June 5: Gol, BR Malls
Gol posted 74.8% load factor in May, down from the previous month, while the volume of passengers slumped 94% from the same period last year. The firm’s employees approved a new collective labor agreement with potential wage cuts and a voluntary dismissal program, local media said.
Malls operator BR Malls reported a 23% decrease in its first quarter net income, and said it expects all of its malls to reopen by July. Competitor Aliansce Sonae said that six of it shoppings centers have already resumed operations.
Road vehicle equipment producer Randon saw net income fall 91% in the first quarter. Vale has made preparations to resume operations at its Southern and Southeastern systems, according China Metallurgical News.
Fashion retailer Restoque concluded negotiations for restructuring of all its debts through an extrajudicial recovery plan. Sporting goods retailer Centauro raised 900 million reais in a share sale.
BNDES approved the creation of a 3 billion-real credit line to protect storage in sugar and alcohol plants, Valor Economico newspaper said.
June 4: Aid to automakers; share offerings
BNDES is likely to sign its first financial assistance agreement with automakers by the end of June, while first aid deal to airline sector will be concluded in the beginning of July, according to two people with knowledge of the matter. Talks are more advanced with General Motors and Fiat, said the people. Both firms and the BNDES declined to comment.
Sporting goods retailer Centauro will price its share offer on Thursday, about one year after its IPO, while retailer Via Varejo approved an eyed share offer, which could raise as much as 4 billion reais. Food retailer IMC mulls raising funds and hired BTG Pactual as an adviser.
Moody’s cut steelmaker CSN’s outlook to negative, as company’s refinancing risk will remain high amid decline in steel demand in Brazil.
June 3: Braskem losses; Drugs readjustment
Braskem reported losses of 4.06 billion reais, while Ebitda sank 61%, reflecting the effects of a weaker Brazilian real and Mexican peso versus the dollar on the firm’s business. Malls manager Multiplan resumed the operations at it JundiaiShopping, located in Sao Paulo state.
Airline Azul hired the law firm which advised Avianca Brasil in its judicial recovery plan, but company doesn’t plan to file for bankruptcy protection, said Folha newspaper. Azul and Gol were downgraded by Moody’s.
Senators approved a bill that forbids companies from readjusting drug prices as well as private health plans during the pandemic, Agencia Senado said. The bill now will be analyzed by the Lower House, according to the report.
Meatpacker JBS is being sued by Brazilian labor prosecutors for an alleged violation of indigenous workers rights after 40 people were fired from a plant in the city of Seara, Santa Catarina state.
June 2: IMC losses; Aura Minerals resumes IPO
Food retailer IMC posted a 46.1 million reais loss for the first quarter, from an 8 million reais loss in the same period last year. Meatpacker Marfrig will test all of its 18,000 employees in Brazil for Covid-19 starting June 2. JBS said that american beef and pork plants are running at about 85% to 90% capacity after a wave of closures to combat Covid-19 infections.
Miner Aura Minerals has joined companies which have resumed IPO processes in Brazil -- the firm had postponed it in March due to Covid-19 crisis. Vale will meet or surpass last year’s volume of iron ore volume sold to China in 2020 even with the pandemic, said Valor Economico newspaper, citing executive Marcello Spinelli. But now, with China getting back to work and Latin America as the new virus hot spot, concern is shifting from demand to supply in the world’s biggest mines amid the outbreak.
Petrobras’s CEO said the oil producer has enough liquidity to withstand a $20 oil and that firm will continue to cut costs and divest assets to protect its financial health. According to him, demand for Brazil’s low sulfur oil kept exports strong during crisis.
May 30, June 1st: Embraer losses; Iguatemi reopens malls
Embraer posted a first-quarter adjusted loss of $104 million, citing the real’s devaluation versus the U.S dollar, Covid-19 effects and negative impact from the failed deal with Boeing. The company said there are no talks on a possible partnership with companies from Russia or China, following a Reuters report Friday that had pushed shares up as much as 19%. Embraer sees regional aviation leading the rebound after coronavirus pandemic.
Iguatemi announced it will reopen four of its malls located in Sao Paulo state this week. Two malls in Sao Paulo and Rio de Janeiro cities set a partnership with Amazon and will have a exclusive page on technology firm’s marketplace, Folha newspaper reported.
A Court decision allowed JBS to reopen its Ipumirim chicken plant in Santa Catarina which was shut on May 18 due to a lack of measures to avoid Covid-19 contamination among workers.
Volkswagen resumes operation in Sao Bernardo do Campo unit, in Sao Paulo state, the automaker’s last plant in South America with activities halted due to the pandemic.
To see what companies did amid the crisis in May, click here. To see actions taken in April, click here. For those in March, click here.
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