Bloomberg News

Hypermarcas Falls Most in Three Weeks as Itau Cuts Estimates

November 29, 2011

(Updates with closing prices in second paragraph.)

Nov. 29 (Bloomberg) -- Hypermarcas SA, the maker of more than 190 consumer products, fell the most in three weeks as Banco Itau BBA cut its estimates for the company’s sales and profits in 2011 and 2012.

Hypermarcas declined 6.7 percent to 7.95 reais at the close of trading in Sao Paulo, the steepest drop since Nov. 7. It was the second-worst performer on the MSCI Brazil/Consumer Staples Index, which was little changed.

Itau cut its 2012 sales forecast for Hypermarcas to 3.81 billion reais ($2.07 billion), 16 percent below its previous estimate. The company will post a net loss of 5 million reais in 2011, according to Itau, compared with a previous forecast for net profit of 432 million reais.

“By any measure, 2011 was a lost year for Hypermarcas, due to a combination of poor execution, terrible visibility and strong competition in a slowing market,” Itau analysts Juliana Rozenbaum and Francine Martins wrote in a note to clients. “There is still negative momentum on Hypermarcas based on the expectations of weak 2011 fourth-quarter results.”

Sao Paulo-based Hypermarcas, which makes consumer goods from diapers to deodorants, reported a third-quarter net loss of 190.5 million reais, compared with a net income of 78 million reais a year earlier, according to a Nov. 7 statement.

Earlier this year, Hypermarcas reduced discounts and the time clients including wholesalers and distributors have to pay for the company’s products, which prompted clients to carry smaller inventories of Hypermarcas’s products, JPMorgan Chase & Co. analyst Isabela Bacchi said in a note to clients Nov. 8.

--Editors: Marie-France Han, Lester Pimentel

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net


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